LONDON (AP) — Disappointing U.S. economic growth figures failed to alter the mood in financial markets Wednesday, which has seen most stocks eke out solid gains for the second day running.
However, gold prices remained under pressure, falling to near three-year lows at one stage as the strength of the dollar continues to undermine the precious metal.
Over recent weeks, markets have been volatile amid concerns over U.S. monetary policy. Last week's confirmation from Ben Bernanke, the chairman of the Federal Reserve, that the central bank may start reining in its monetary stimulus this year prompted big falls in stock markets as well as a sharp appreciation in the dollar. The extra money provided by the stimulus in recent years has found its way back into financial markets, shoring up stock markets, but keeping a lid on the dollar.
However, U.S. economic growth figures for the first quarter suggested that the so-called tapering in asset purchases by the Fed may not happen as soon as many investors have predicted.
Instead of the previous 2.4 percent annualized increase estimated, the Commerce Department said the U.S. economy only grew at a 1.8 percent tick, with most components contributing less than thought.
Though the news may be positive for stocks in that it may ease tightening fears, investors were disappointed that the U.S. economy is not as strong as thought. As a result, stocks were largely unchanged from the levels they were before the release.
"Although the reading is strictly taper-negative, it is by now rather outdated with this Friday marking the end of the second quarter," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "As such the stock market appears to be taking the revision in its stride."
In Europe, the FTSE 100 index of leading British shares was up 1 percent at 6,165 while Germany's DAX rose 1.6 percent to 7,940. The CAC-40 in France was 2.1 percent higher at 3,726.
In the U.S., the Dow Jones industrial average was up 0.7 percent at 14,869 while the broader S&P 500 index rose the same rate to 1,599.
Despite signs that the recent correction in stock markets may have stabilized, investors remain cautious.
"It still feels as if markets are simply looking to catch their breath after all the excitement of the past week, and so it is perhaps unwise to suggest that two days of positive trading make a trend," said Chris Beauchamp, market analyst at IG.
Elsewhere, gold was in focus, as it fell over $50 at one stage to a near three-year low of $1,223 an ounce. However, it picked up slightly to trade $42.80, or 3.4 percent, down at $1,232. Many gold-watchers think the metal, which has shed around 20 percent of its value this year, has further to fall given the dollar's appreciation and the prospect of less Fed stimulus. Gold has advanced over the past few years as a store of value at a time central banks had opened the printing taps, as well as through its status as a safe haven for nervous investors.
Earlier, the mood in Asia was calmer as traders digested comments from the People's Bank of China that it would act to keep credit markets functioning, if needed.
China's central bank caused a global rout in markets on Monday after it moved to curb so-called shadow banking — unregulated lending to companies starved of credit by traditional banks. Investors worried that would cause an increase in borrowing rates for companies, hurting business.
Mainland Chinese shares were mixed after enduring sharp losses earlier this week. The Shanghai Composite Index fell 0.4 percent to 1,951.50. But the smaller Shenzhen Composite Index jumped 2.5 percent to 901.72. In Hong Kong, the Hang Seng surged 2.4 percent to 20,338.55.
Elsewhere, Japan's Nikkei 225 fell 1 percent to close at 12,834.01 as the yen recovered some of its recent losses against the dollar, which was trading 0.5 percent lower at $97.61 yen.