Bernanke warns of more U.S. economic difficulties

Warning of the dual risks of a further economic slowdown and higher inflation, Ben Bernanke, chairman of the Federal Reserve, said Tuesday that the prospect for any immediate improvement in the U.S. economy was bleak.

But the U.S. stock market, after the euro rose to a record against the dollar and markets in Asia and Europe were pushed lower by fears of further cracks in the global financial system, recovered from its own sharp fall as the price of oil plunged.

Investors may have been cheered by the decline in oil prices, but that was not necessarily a sign of improvement, since the fall was driven in part by the view that a weaker global economy may no longer be able to support oil prices above $140 a barrel.

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