By Andrew MacAskill Nov. 28 (Bloomberg) -- The dollar rose against the euro, trimming its biggest weekly decline since March, as stocks fell, prompting investors to take refuge in U.S. Treasuries. The dollar also advanced versus the Swiss franc, South African rand and Swedish krona as Europe’s Dow Jones Stoxx 600 Index dropped for the first time in five days. The euro weakened against the yen and the pound as investors added to bets the European Central Bank will cut interest rates next week after inflation slowed by the most since at least 1991. “The momentum in equities has faded and so people are turning to the safety of the dollar,” said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi Ltd. “The recent return of risk appetite is likely to prove short lived because the economic problems aren’t over.” The dollar strengthened to $1.2828 per euro as of 6:39 a.m. in New York, from $1.2904 yesterday, down 1.8 percent from Nov. 21, when it capped its biggest weekly drop since March 28. The dollar bought 95.28 yen, from 95.19 yesterday and 95.96 a week ago. The euro weakened to 122.18 yen, from 122.89 yesterday, trimming a weekly gain to 1.2 percent this week. The Dow Jones Stoxx 600 Index declined 0.6 percent and futures on the Standard & Poor’s 500 Index dropped 0.5 percent, increasing the attractiveness of dollar-based assets as a haven. Treasuries rose today, heading for their biggest monthly gain since Ronald Reagan was in the White House, with the yield on the 10-year note falling three basis points to 2.95 percent. That’s four basis points short of the record low 2.91 percent reached this week. Dollar Index The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden’s krona, rose 0.5 percent to 85.961. The index climbed to 88.463 on Nov. 21, the highest since April 2006. India’s rupee fell the most in two weeks, losing 1.3 percent to 50.0950 per dollar, after terrorist attacks across Mumbai left at least 120 people dead. Authorities closed stock, bond, commodity and currency markets yesterday. The Thai baht declined for a third day, reaching 35.53, the lowest level since February 2007, as protesters occupied Bangkok’s international airport for a fourth day. The euro extended declines against the dollar and the yen after the European Union statistics office in Luxembourg said inflation in the region slowed to 2.1 percent in November from 3.2 percent in October. ‘Inheriting the Slowdown’ “Some of the shine has come off the euro since that data came out,” said Neil Jones, head of hedge-fund sales in London at Mizuho Capital Markets. “It shows Europe is still inheriting the whole credit slowdown. The ECB’s now talking about aggressive interest-rate cuts and that’s going to weigh on the currency.” Investors added to bets the ECB will cut its main refinancing rate on Dec. 4. The implied yield on Euribor futures contracts expiring in December fell two basis points to 2.49 percent today. The central bank lowered its key rate by 100 basis points since Oct. 8, to 3.25 percent. The dollar was poised for a third monthly decline against the yen and its first monthly loss versus the euro since June, on speculation policy makers’ steps to spur growth and lending reduced demand for the relative safety of U.S. assets. The Federal Reserve said on Nov. 25 it will assign $800 billion in new funding to bolster credit flows to homebuyers, consumers and small businesses and will take on credit risk by buying debt. The European Union proposed a package for its 27 member countries on Nov. 26 after data this month showed the euro region fell into a recession in the third quarter for the first time since the introduction of the euro in 1999. To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net

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