* Fed chairman lays out path for policy changes
* U.S. stocks open weaker, market watching Greece
* U.S. bonds, dollar rise on flight-to-safety bid
(Updates with open of U.S. markets, adds byline, dateline,
previous: LONDON)
By Manuela Badawy
NEW YORK, Feb 10 (Reuters) - U.S. stocks fell early on
Wednesday while the dollar and government bond prices rose
after Federal Reserve Chairman Ben Bernanke said the central
bank's policy-makers could begin pulling back stimulus by first
removing some cash from the financial system.
Adding to the selling pressure in equity markets was
concerns over whether a rescue plan for heavily indebted Greece
could be in place.
Bernanke, in testimony prepared for the House Financial
Services Committee, said the Fed may raise the discount rate
"before long" as part of the "normalization" of Fed lending. He
said this should not be seen a change in the outlook for
monetary policy, and repeated the Federal Open Market Committee
statement that low rates are warranted "for an extended
period".
Stocks were down with the Dow Jones industrial average
<> down 0.76 percent at 9,982.61. The Standard & Poor's 500
Index <.SPX> was down 0.86 percent, at 1,061.34 and the Nasdaq
Composite Index <> was down 0.71 percent, at 2,135.50.
The U.S. central bank slashed benchmark rates to near zero
to combat the worst financial crisis since the Great
Depression.
While the economy has grown for the past two quarters,
unemployment is at a lofty 9.7 percent. Bernanke made clear the
time for tightening monetary policy was still some ways away,
even though the Fed's thinking on its exit strategy had
advanced. For more information click on []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
4/32, with the yield at 3.6255 percent, down from 3.69 percent
on Tuesday.
Greece has been struggling with a debt crisis that
threatened to spill over into other EU countries such as Spain
and Portugal.
While news of a possible aid package for Greece had helped
equities and other assets rally on Tuesday and depressed
Treasury prices, new doubts about the feasibility of a
straightforward bailout prompted investors to strike a more
cautious tone on Wednesday. []
"There has been a lot of back and forth on Greece," said
Vassili Serebriakov, senior currency strategist, at Wells Fargo
in New York.
"I think it had a short-term positive impact on the euro
yesterday but I don't think the market is wholeheartedly
embracing the idea that with the possible bailout, the worst is
behind Greece or the euro zone."
The dollar was up against a basket of major trading-partner
currencies, with the U.S. dollar index <.DXY> up 0.13 percent
at 79.968. The euro <EUR=> was down 0.33 percent at $1.3744.
Against the Japanese yen, the dollar <JPY=> was down 0.11
percent at 89.55 after the U.S. government reported a
wider-than-expeted trade deficit in December. [].
Commodities were hurt as the dollar appreciated. Crude oil
<CLc1> was slightly lower at $73.66 per barrel, and gold prices
<XAU=> eased 0.37 percent to $1073.1. The Reuters/Jefferies
CRB Index <.CRB>, a benchmark basket of 19 futures, was down
0.23 percent, at 264.50.
World equities as measured by the MSCI All-Country World
Index <.MIWD00000PUS> was up 0.38 percent, with the
pan-European FTSEurofirst 300 <> index rising 0.94
percent and Athens' benchmark <> up 2.84 percent.
(Additional reporting by Gertrude Chavez-Dreyfuss, Editing by
Chizu Nomiyama)
