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Bernanke Endorses Additional Stimulus Effort


Top officials in Washington may craft a second effort to stimulate the U.S. economy by boosting government spending.

Federal Reserve Chairman Ben Bernanke told the key Congressional House Budget Committee that the U.S. economy faces a possibly "protracted" slowdown, and "targeted" measures could ease the impact. In Monday's testimony, he suggested these measures be crafted in ways to get the credit market moving again, but did not specify how.

Severe problems in the U.S housing market and a stalled credit market sparked the recent global financial crisis.

White House spokeswoman Dana Perino says President Bush is open to the idea of a stimulus package, but his support will depend on the details of any plan that emerges from Congress.

Asian and European stock markets moved higher in Monday's trading, with investors and lenders apparently encouraged by the stimulus idea and other efforts to bolster the battered financial system. U.S. stocks were mostly higher in mid-day trading.

A key measure of banks' willingness to lend to each other, businesses, and consumers, showed the tight credit market is easing. The stalled credit market had slowed business and raised fears the economy could shrink.

Many governments are taking measures to cope with the financial crisis. Russia for example, may broaden the functions of the agency that insures deposits. Germany's cabinet discussed details of the recently-passed package intended to aid banks, as well as what other actions might be needed.

South Korea has said it will guarantee up to 100 billion dollars in foreign debts held by the country's banks, and provide lenders with 30 billion dollars in direct funds.

Earlier, the Netherlands said it will inject 13 billion dollars into Dutch-based ING, one of the world's 20 largest banks. ING warned Friday it expects a quarterly loss of 670 million dollars because of the global credit crisis.

Some information for this report was provided by AFP, AP, Reuters and Bloomberg.

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