June 4 (Bloomberg) -- European stocks rose for the first time in three days and oil rallied on speculation that the worst of the global recession is over. Russian shares led the advance after the country’s central bank cut interest rates for the third time in six weeks. The Dow Jones Stoxx 600 Index of European shares climbed 0.6 percent at 11:20 a.m. in London as energy companies advanced, while futures on the Standard & Poor’s 500 Index added 0.6 percent, indicating the measure may gain for the fifth time in six days. Russia’s Micex Index rose 2.7 percent. Oil advanced as much as 1.9 percent to $67.38 a barrel in New York after Goldman Sachs Group Inc. raised its 2009 forecast to $85. The European Central Bank and the Bank of England may detail plans to purchase securities today amid indications that efforts to pull the global economy out of its first recession since World War II and unlock credit markets are working. The MSCI World Index of 23 developed stock markets has risen 43 percent since March 9, while the gap between what banks and the Treasury pay to borrow money for three months is near the lowest in 21 months. “As the financial crisis eases, an energy shortage lies ahead,” Goldman Sachs analysts Jeffrey Currie in London and David Greely in New York wrote in a research report e-mailed today. Crude’s 50 percent advance so far this year is “likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity.” Treasuries Fall Treasuries fell for the first time in three days before government reports that economists said will show claims for unemployment benefits declined and U.S. companies are becoming more productive. The yield on the 10-year note increased four basis points to 3.58 percent, according to BGCantor Market Data. Initial jobless claims declined to 620,000 for the seven days ended May 30, from 623,000 a week earlier, according to the median forecast in a Bloomberg News survey of economists. Worker productivity rose at a 1.2 percent annual rate from January through March, rebounding from a 0.6 percent decline in the fourth quarter, a separate survey showed. The Labor Department reports both figures. Manufacturing, personal-income and construction-spending data earlier this week beat economists’ estimates, adding to evidence the U.S. may be pulling out of the recession that began in December 2007. The American economy will expand 0.5 percent next quarter, according to the median of 63 economists’ estimates compiled by Bloomberg. European Yields Rise European government bonds fell as France and Spain sold debt and retail sales in the region increased for the first time in seven months, giving policy makers less reason to reduce interest rates today. The yield on the German bund rose as much as three basis points to 3.61 percent. The ECB will keep the main refinancing rate at 1 percent today, according to all but two of 54 economists surveyed by Bloomberg. Oil gained after New York-based Goldman Sachs raised its forecast from $65 and predicted further increases next year as demand recovers and supplies shrink. The Hague-based Royal Dutch Shell Plc, Europe’s largest energy company, climbed 1.1 percent to 1,682 pence in London, while Paris-based Total SA added 1.9 percent to 41.43 euros. London-based BP Plc added 1.7 percent to 527.5 pence after Exane BNP Paribas upgraded Europe’s second- biggest oil company to “outperform” from “neutral.” The Stoxx 600’s rally has pushed valuations of its companies to 25.5 times average earnings this week, the highest level since 2004, data compiled by Bloomberg show. Stocks have become more expensive even as trading in futures shows European companies will cut dividends over the next 18 months at the fastest rate since at least 1999. Dividend Futures Dow Jones Euro Stoxx 50 Index Dividend Futures that allow investors to speculate on payouts show companies will lower their dividends by 28 percent this year compared with 2008. In 2010, reductions will amount to 32 percent, according to data compiled by the Eurex exchange and Bloomberg. Copper fell for a third straight day on the London Metal Exchange, its worst losing streak in three weeks, on speculation that this year’s 60 percent rebound in prices will curb demand. Nickel, tin and lead also declined. Gold for immediate delivery advanced 0.7 percent to $970.02 an ounce. The euro rose against the dollar and the yen before the ECB meeting. The yen declined versus the dollar after a government report showed Japanese investors increased purchases of overseas bonds to the most in a month. The euro strengthened 0.7 percent to 136.95 yen and 0.4 percent to $1.4220. The yen weakened 0.3 percent to 96.32 per dollar. Pound Gains The pound rose to $1.6405 amid speculation the Bank of England will say it plans to maintain the pace of bond purchases as the economy shows signs of recovery. The bank’s Monetary Policy Committee won’t expand a plan to buy 125 billion pounds ($208 billion) of government and corporate bonds, according to all but three of 40 economists surveyed by Bloomberg. Russian stocks posted the steepest gain among equity benchmarks in the world’s 50 biggest markets. The Micex index climbed 2.8 percent after Russia’s central bank reduced interest rates for the third time in six weeks and rising oil prices brightened the earnings outlook for energy producers. OAO Sberbank, Russia’s biggest lender, climbed 5 percent after Bank Rossii lowered the refinancing rate to 11.5 percent from 12 percent and reduced the repurchase rate charged on central bank loans to 10.5 percent from 11 percent. OAO Lukoil, the nation’s second-largest oil producer, added 2.4 percent. Emerging Markets The MSCI Emerging Markets Index fell for a third day, losing 0.8 percent after Asian shares dropped on bigger-than- forecast job losses in the U.S. and South Korea’s warning that it’s too early to turn optimistic on the economy. Credit default swaps protecting against a Latvian default rose to 729 basis points from 675 basis points on concern the Baltic nation may be forced to devalue its currency, abandoning the peg to the euro, according to CMA Datavision prices. Latvia will maintain the lat’s peg to the euro until the country adopts the single currency, the Riga-based central bank said in a statement on its Web site today. Latvia failed to sell about 50 million lati ($99.9 million) in Treasury bills at auction yesterday, receiving no bids, according to a statement on the Riga Stock Exchange. The failed auction helped push down shares of Stockholm-based lender Swedbank AB, the biggest bank in the Baltic states. The bank rebounded 4.7 percent to 39.80 kronor today. The Swedish krona traded near the lowest level in six weeks against the euro on concern Latvia will devalue. Iceland’s central bank lowered the benchmark interest rate by a percentage point to 12 percent today, defying the International Monetary Fund, as the economy slumps into its worst recession in 60 years.

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