The dollar rose against the euro as investors sought refuge in the U.S. currency after stocks fell on concern a three-month rally outpaced expectations for economic growth and earnings. The dollar climbed from a five-month low against the euro as the Dow Jones Stoxx 600 Index of European shares fell 1 percent from near the highest level since November and U.S. stock-index futures declined. The euro weakened as a report showed European gross domestic product shrank 2.5 percent from the fourth quarter, the most since 1995. The ruble fell after Citigroup Inc. advised investors to sell Russian shares after the market doubled in three months. “The dollar is rising as stocks take a breather,” said Martin McMahon, a foreign-exchange strategist in Zurich at Credit Suisse Group AG. “You can’t say that today is the end of the move downwards for the dollar.” The dollar strengthened 0.7 percent to $1.4210 per euro at 8:20 a.m. in New York, from $1.4303 yesterday, after earlier gaining 0.8 percent to $1.4177 in the biggest intraday advance since May 27. The U.S. currency traded at 95.89 yen, compared with 95.76. The yen climbed 0.6 percent against the euro to 136.18. The ruble weakened 0.5 percent to 30.7112 per dollar. Every major stock market in Europe dropped after the European Union’s statistics office in Luxembourg said household consumption in the region shrank 0.5 percent, while exports dropped 8.1 percent and imports declined 7.2 percent, all the most since the series started in 1995. Investment spending weakened 4.2 percent, after a 4.3 percent contraction in previous quarter. Russian Stocks The dollar-denominated MSCI Russia Index, which climbed 105 percent through yesterday since the end of February, sank 4.3 percent, the most in almost two weeks, as Citigroup downgraded Russian stocks to “underweight.” Standard & Poor’s 500 Index futures dropped for the first time in five days, losing 0.6 percent, as Credit Suisse cut its recommendation on American equities. The dollar also rose after Reuters said Asian central banks are likely to keep buying U.S. Treasuries to help maintain market stability, citing officials and other people with direct knowledge of policy making that it didn’t identify. “The recent reserve diversification fears are clearly exaggerated given the lack of any viable alternative to the dollar,” said Lee Hardman, a foreign-exchange strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. The euro dropped after Finland’s Finance Minister Jyrki Katainen said EU countries need bank stress tests to regain financial market trust and jolt them out of the first worldwide recession since World War II. Credibility ‘Precondition’ “We need more knowledge of what’s going on in the biggest European banks,” Katainen, 37, said in an interview in Helsinki today. “That’s a precondition to improve credibility and trust and confidence in the banking sector.” European producer prices declined the most on record in April led by lower energy costs, the EU’s statistics office said. Factory-gate prices in the 16-nation euro region fell 4.6 percent from a year earlier, after a revised 2.9 percent drop in March. That was the biggest decline since the series began in January 1981 and steeper than the 4.5 percent median forecast of 17 economists in a Bloomberg News survey. U.S. companies cut 532,000 jobs last month after eliminating a revised 545,000 positions in April, ADP Employer Services reported today. The median forecast of 29 economists surveyed by Bloomberg News was for a reduction of 525,000. A report from the Labor Department on June 5 will show the U.S. jobless rate climbed to 9.2 percent in May, the highest level in more than 25 years, a separate Bloomberg survey showed.

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