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European Stocks Climb With Crude as Dollar Retreats

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European equities rose and the dollar fell against the euro for the first time in four days as the greenback retraced some of the gains that had been driven by prospects for higher interest rates. Oil rallied.

The The Stoxx Europe 600 Index rose 0.4 percent as of 8:21 a.m. in London, while Standard & Poor’s 500 Index futures were little changed after the measure sank 1 percent Tuesday. The MSCI Asia Pacific Index dropped a second day, down 0.5 percent as South Korean and Australian stocks slid. The Bloomberg Dollar Spot Index fell 0.2 percent while the yen was little changed after touching its weakest since 2007 on Tuesday.

“There’s profit-taking after the U.S. dollar rallied overnight,” said Roy Teo, a strategist in Singapore at ABN Amro Group NV. “We still expect the Fed lift-off in September. The selloff in the dollar in the past few months was overdone as bearish sentiment in the currency was near extreme levels.”

The dollar gauge had surged to a one-month high as better-than-expected readings on U.S. capital-equipment orders, new home sales and regional manufacturing Tuesday burnished the outlook for tighter monetary policy, with the Federal Reserve emphasizing that any rate increases will be driven by data. Greek officials plan to meet Wednesday in Brussels with creditors as time runs short to secure a deal before the country needs to make payments to the International Monetary Fund in early

June.

West Texas Intermediate crude surged 1.3 percent to $58.77 a barrel after slipping 2.8 percent Tuesday from the Friday close. U.S. crude inventories probably fell by 1.5 million barrels last week, according to a Bloomberg survey of analysts before an Energy Information Administration report due Thursday. Brent oil added 1 percent to $64.36 a barrel after sliding 2.8 percent last session.

The euro rose 0.3 percent to $1.0908 after sinking more than 2 percent over the previous three days.

Greek Talks

Euro-area markets are on tenterhooks as Greece’s Syriza-led administration seeks bailout loans, with a payment due to the International Monetary Fund next month. The nation’s finance minister, Yanis Varoufakis, blamed creditors’ insistence on more austerity for the lack of a deal that would release the funds.

There has been little convergence in recent talks to release bailout funds Greece needs to pay the IMF almost 1.6 billion euros ($1.7 billion) next month, said people familiar with the matter, who asked not to be identified because the discussions are private. The first transfer is due June 5.

The Shanghai Composite Index, the best performing primary equity index in Asia the past month, advanced 0.6 percent, having earlier dropped as much as 1.1 percent. The Hang Seng China Enterprises Index, a gauge of Chinese stocks listed in Hong Kong, slid 0.7 percent, after the index climbed to its highest level since January 2008 on Tuesday.

Asian Shares

The Kospi index in Seoul slumped as much as 1.9 percent, the most since January 2014, while Australia’s S&P/ASX 200 Index declined 0.8 percent. Japan’s Topix index rose 0.1 percent.

While developed-nation currencies rebounded, with the New Zealand and Australian dollars each rising at least 0.2 percent, emerging-market currencies fell in Asia, with the Korean won down 0.4 percent.

Fed Vice Chairman Stanley Fischer said Tuesday at Tel Aviv University that U.S. policy makers will consider global growth as they start to raise key rates, adding that borrowing costs could be boosted more gradually should the world economy falter. Chair Janet Yellen said last week that borrowing costs will be boosted this year.

Fed Outlook

“The Fed is approaching the hiking stage within this year,” said Kei Katayama, who trades U.S. bonds in Tokyo at Daiwa SB Investments Ltd., which oversees $47 billion. “With Greece, geopolitical risk is increasing. The dollar is a safe haven.”

Katayama sees the yen sliding to 128 per dollar this year and is holding more dollars than the percentage in the index he uses to gauge performance.

Yields on 10-year Treasuries were little changed at 2.15 percent, after slipping seven basis points on Tuesday as U.S. markets resumed following the Memorial Day holiday.

Nickel for three-month delivery on the London Metal Exchange increased 0.7 percent to $12,765 a metric ton, following three days of losses. Copper added 0.5 percent to $6,134 a ton, while zinc rose 0.3 percent.

Gold for immediate delivery was little changed at $1,188.65 an ounce after sliding as much as 1.7 percent last session as the dollar’s gains curbed demand for the precious metal. The Bloomberg Commodity Index rose 0.3 percent after sinking on Tuesday to its lowest close since April 22.

(Source: Bloomberg)