Fed chief denies bid to dent stocks

US Federal Reserve chairman Mr Alan Greenspan yesterday again insisted he was unable to influence the course of US stock prices, which he said were "properly valued" at present.

Mr Greenspan, who on two recent occasions rattled Wall Street by suggesting that current equity prices were unsustainable described the market as "very complex and international ... with millions of players".

"There is no way to talk down or talk up prices or interest rates," he told a breakfast meeting of the National Association of Business Economists.

The chairman on Tuesday came under unusually sharp questioning from a member of the House of Representatives budget committee, who suggested he had tried to drive down stock and bond prices with his comments.

Mr Greenspan said he had merely wanted to explain to the public that the Fed's Open Market Committee, which sets monetary policy, must take the performance of Wall Street into account.

Yesterday, he said corporate balance sheets had now become a key economic indicator.

He told his audience he did not know the outlook for stock prices but added that if earnings forecasts were accurate, the market was appropriately valued.

In a question and answer session following the speech, Mr Greenspan said the key question was whether corporate profit margins would "continue to increase", as implicit in various forecasts.

The chairman was to appear again before a Congressional committee later yesterday to deliver testimony on US economic prospects.

Analysts and traders will closely scrutinise his remarks for signs that the Federal Reserve may soon move to tighten credit in a bid to dampen inflation and slow the surge on Wall Street.