BEN BERNANKE

The euro rallied more than 1 percent against the dollar on Thursday after U.S. housing data and better-than-expected euro zone manufacturing and services activity revived appetite for risk. The yen surrendered early gains versus the dollar and dropped sharply against other currencies as U.S. stocks gained, helping improve sentiment a day after Federal Reserve chairman Ben Bernanke painted a gloomy outlook for the U.S. economy.

Dollar funding costs eased on Thursday with the three-month interbank rate falling below 0.5 percent for the first time in two months and gains in Euro dollar futures implying further declines in the near term.

Oil rose on Thursday after better than expected euro zone manufacturing and services data, but rising U.S. oil inventories and fears about the broader U.S. economy, the world's largest, kept prices in check. The euro zone's private sector surged this month, according to a survey released on Thursday, reassuring markets spooked by U.S. Federal Reserve Chairman Ben Bernanke describing the prospects for the United States as unusually uncertain.

Stock index futures rose on Thursday, pointing to a rebound from Wednesday's sell-off after eBay posted solid earnings and Qualcomm boosted its outlook.

The U.S. dollar fell broadly on Thursday as better-than-forecast European economic data boosted equities and spurred appetite for risk, with a drop in U.S. lending rates putting additional pressure on the currency.

The dollar fell close to a seven-month low against the yen on Thursday on downbeat comments from Federal Reserve Chairman Ben Bernanke, while better-than- forecast euro zone data buoyed the euro. Bernanke said the U.S. economic outlook was unusually uncertain and that the Fed was ready to ease monetary policy further if necessary, sending the two-year U.S. Treasury yield to a record low and diminishing the allure of the dollar versus the yen.

Oil reversed early losses on Thursday to head back toward $77 a barrel as signs of a stronger recovery in Germany soothed investor concerns, but rising U.S. inventories kept prices in check.

The Federal Reserve stands ready to ease monetary policy further if the budding U.S. economic recovery withers, Fed Chairman Ben Bernanke said on Wednesday, describing the outlook as unusually uncertain.

Gold prices fell below $1,190 an ounce in Europe on Thursday as investors awaited the outcome of European bank stress tests at the end of the week, with a majority of institutions expected to pass the tests. Spot gold was bid at $1,186.05 an ounce at 0833 GMT (4:33 a.m. EDT), against $1,191.80 late in New York on Wednesday. U.S. gold futures for August delivery fell $6.00 to $1,185.80.

Stock index futures pointed to a higher open on Wall Street on Thursday following the previous session's steep losses, with futures for the S&P 500 up 0.31 percent, Dow Jones futures up 0.32 percent and Nasdaq 100 futures up 0.58 percent at 0810 GMT (4:10 a.m. EDT).

The dollar fell toward a seven-month low against the yen but world stocks recovered earlier losses on Thursday after Federal Reserve chairman Ben Bernanke painted a gloomy outlook for the U.S. economy.

The yen neared a 7-1/2-month high and Asian stocks slid on Thursday after comments by the head of the Federal Reserve added to concerns about the U.S. economy, causing investors to dump riskier assets ahead of European bank stress test results.

Oil slid for a second day on Thursday, a day after Fed chief Ben Bernanke rekindled unease across financial markets over the pace of economic recovery, while rising U.S. inventories also kept prices in check.

Oil slid for a second day on Thursday, a day after Fed Chairman Ben Bernanke rekindled unease across financial markets about the pace of economic recovery, while rising U.S. inventories also kept prices in check.

The yen neared a 7-1/2-month high and Asian stocks slid on Thursday after comments by the head of the Federal Reserve added to concerns about the U.S. economy, causing investors to dump riskier assets ahead of European bank stress test results.

The dollar slid towards a recent seven-month low versus the yen on Thursday after Federal Reserve Chairman Ben Bernanke expressed concern about the U.S. economy but steered clear of hinting about further easing as some had hoped. The euro, which lost sharply after his comments sparked outflows from stocks and other risk assets, held steady at lower levels ahead of Europe's bank stress test results on Friday.

Gold slipped more than half a percent on Thursday and could revisit its weakest level in two months as investors sold bullion to cover equities losses ahead of Europe's bank stress test results this week. Gold has fallen more than 6 percent since hitting a lifetime high around $1,264 an ounce in late June on worries the debt crisis in Europe would spread.

The dollar slid towards a recent seven-month low versus the yen on Thursday after Federal Reserve Chairman Ben Bernanke expressed concern about the U.S. economy but steered clear of hinting about further easing as some had hoped.

Gold prices dropped further in Asian trade Thursday along with stocks as markets await outcome of Europe's bank stress test. Gold for immediate delivery was seen trading at $1185.71 an ounce at 12.00 noon Singapore time while U.S. gold futures for August delivery was at $1,185.3 an ounce.

The yen neared a 7-1/2-month high and Asian stocks slid on Thursday after comments by the head of the Federal Reserve added to concerns about the U.S. economy, causing investors to dump riskier assets ahead of European bank stress test results.

Asian stocks slipped and the yen rose on Thursday after comments by the head of the U.S. Federal Reserve added to concern about the U.S. economy and left investors uneasy ahead of European bank stress tests.