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Ben Bernanke says US economic recovery is slow and uneven but appears to rule out third round of fiscal stimulus Stock markets have dropped after a speech by the US Federal Reserve chairman, Ben Bernanke, raised fears over the global economic recovery. Shares fell broadly in London, echoing a late sell-off on Wall Street, after Bernanke appeared to rule out further quantitative easing. Speaking to bankers in Atlanta on Tuesday night, Bernanke said the US economic recovery was “frustratingly slow” and “uneven” but stopped short of indicating that the Federal Reserve would pump more cash into the economy. There had been speculation before the speech that the Fed chair might hint at a third round of fiscal stimulus measures, dubbed QE3, following recent weak economic data . US markets finished down on the news, with the Dow Jones falling 19 points by the close. The MSCI index of Asia-Pacific stocks fell 0.7% overnight, to add to the sell-off. The FTSE 100 fell in early trading too, down 38 points at 5826. According to Chris Weston of IG Index, Bernanke’s comments have left traders “scratching around” for guidance on whether the world economy is faltering. Gary Jenkins of Evolution Securities said Bernanke’s speech had “something for everyone with the exception of those who might favour QE3″. “He has to be careful what he says about further quantitative easing or it could become a self-fulfilling prophecy. He did say that this quarter’s economic activity has been hampered by supply chain disruptions associated with the Japanese earthquake and tsunami, the effects of which are likely to dissipate over the coming months. Other Fed members were also speaking yesterday with much the same message coming through: monetary policy is likely to remain accommodative for some time yet, but further QE is looking unlikely at this stage,” Jenkins said. A “frustratingly slow” recovery In the speech, Bernanke said the US recovery was clearly being held back by the troubled jobs and housing markets but there were indications that petrol prices would fall and the impact of Japan’s nuclear disaster on manufacturing was on the wane. “Overall the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers,” Bernanke said. A spate of weak economic data was capped by a report last week that showed the US added only 54,000 jobs in May, the fewest since September last year. The unemployment rate in May rose to 9.1%, from 9% in April. The parlous nature of the US jobs market was underlined once more on Tuesday as the labour department reported that businesses had fewer job openings in April with employers posting 3m ads for jobs in April, down from 3.1m in March. Gavan Nolan, director of credit research at Markit, argued that there were two schools of thought on the economy at present. “The first believes that recent data weakness indicates that demand is dwindling and the economy is in need of further stimulus. The second is convinced that we are in a transitory phase that will abate once the effects of the Japanese earthquake and higher commodity prices are less acute,” Nolan said. US economy Ben Bernanke Stock markets Economics United States Alex Hawkes Dominic Rushe guardian.co.uk