The pound rose against the dollar, snapping a three-day decline, after a rebound in stocks revived demand for riskier currencies. The British currency also climbed against the euro and the yen after the Daily Telegraph reported European finance ministers plan to discuss the pound’s decline at the Group of Seven meeting in Rome today. The benchmark FTSE 100 Index of equities jumped by the most in a week, led by bank HSBC Holdings Plc, as investors bet governments will expand efforts to revive rescue lenders. Gains by banks are “positive for the pound because the U.K. economy has a high exposure to the financial sector,” said Neil Jones, head of European hedge-fund sales in London at Mizuho Corporate Bank. “Some market participants covered short positions before the G-7 meeting. A weak pound gave the U.K. an advantage and there’s speculation some European ministers may raise this issue.” The pound climbed 1.7 percent to $1.4516 as of 11:27 a.m. in London, the biggest one-day gain since Jan. 16, paring its decline this week to 1.8 percent. The currency advanced 1.7 percent against the euro to 88.68 pence. It strengthened 2.4 percent to 132.89 yen. French and German finance ministers plan to confront Chancellor of the Exchequer Alistair Darling at the G-7 meeting tonight over sterling’s decline and ask him to consider action to boost the pound, the Telegraph reported today, without saying where it got the information. The currency tumbled 26 percent against dollar and 23 percent versus the euro last year. Gilts Fall The pound’s trade-weighted index, a gauge of its performance against currencies of Britain’s trading partners including the yen, Swiss franc, euro and dollar, rose to 75.12 today, from 73.81 yesterday. The measure was at 76.27 a week ago. The FTSE 100 increased 1.4 percent and the MSCI World Index advanced 0.9 percent. President Barack Obama’s housing plan will use government money to help reduce interest rates for struggling borrowers, and he will ask lawmakers to approve more ways to change mortgages, according to a person briefed on the proposal. Gilts fell, with two-year notes snapping four days of gains. The two-year yield advanced eight basis points, the biggest one- day rise in yield since Feb. 3, to 1.29 percent. The 10-year yield climbed five basis points to 3.53 percent. The 4.50 percent security maturing in March 2019 dropped 0.47, or 4.7 pounds per 1,000-pound ($1,452) face amount, to 108.15. Yields move inversely to bond prices. ‘Risk Appetite’ Gains by sterling and in gilt yields may be limited as economic reports next week are forecast to show consumer price inflation declined and retail sales growth slowed in January. “The decline in gilt prices today is a product of rising risk appetite,” said Richard McGuire, a senior fixed-income strategist in London at Royal Bank of Canada. “People in the market are paring back some bond bullishness we’ve seen earlier in the week. Going forward, the poor fundamental backdrop remains decidedly conducive for fixed-income securities.” The yield difference between two- and 10-year notes widened to 236 basis points yesterday, the most since Bloomberg started compiling the data in 1992. It was at 224 basis points today. The average in the past five years was nine basis points.

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