Investors said Mr. Bernanke's commentswould reinforce2s expectations the Fed will cutinterest rates by 50 basis points at its policymeeting this month. The S&P 500 index, which had beendown, rallied29 sharply, though gains latersubsided. Treasury yields pared their earlierrise, while the dollar fell against the euro,trading 0.8 percent lower at $1.4783. The Fed chairman said demand for housing"seems to have weakened further". High oilprices, lower equity3 prices and softeninghome values were also likely to "weigh onconsumer spending". He warned that the financial situation"remains fragile3 and many funding marketsremain impaired". Financial conditions"continue to pose a downside risk to the outlookfor growth". Earlier, the European Central Bank steppedup its warnings that eurozone rates may yetrise, even though the ECB left rates unchangedat 4 per cent. ……
