By Justin Carrigan March 26 (Bloomberg) -- The euro rallied from a 10-month low against the dollar after Greece received a promise of aid to tackle its record debt burden. Ten-year Treasuries rebounded from three days of losses. The 16-nation currency strengthened 0.9 percent against the dollar at 10:25 a.m. in London. The yield premium investors demand to hold Greek 10-year bonds rather than benchmark German securities narrowed for a second day and the Athens Stock Exchange’s ASE Index climbed as much as 3.2 percent. The Stoxx Europe 600 Index declined 0.5 percent, while futures on the Standard & Poor’s 500 Index advanced 0.2 percent. The yield on the 10-year Treasury note slipped 3 basis points. Nickel rose for a second day and oil added 0.5 percent. European leaders backed a Franco-German proposal yesterday for a mix of International Monetary Fund and bilateral loans for Greece, saying the nation probably won’t need outside help to cut the region’s biggest budget deficit. Even with today’s rebound, U.S. government bonds are headed for the biggest weekly loss this year after bidding waned at three auctions and 10-year interest-rate swap spreads stayed negative. “Investors see the agreement as a backstop, and it is helping sentiment towards the euro,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London, of the Greek accord reached in Brussels. “However, this is a rather uninspired recovery and it’s difficult to say that this is an unequivocal vote of confidence.” Greek Bonds The euro gained against all of the 16 most-traded currencies tracked by Bloomberg, while the yield on the two-year Greek note tumbled 38 basis points to 4.46 percent. The Dollar Index snapped a three-day advance, declining 0.4 percent to 81.822. Forward contracts on China’s yuan strengthened the most in a week after Fan Gang, an adviser to the country’s central bank, said the nation may resume a so-called managed float of the currency, while avoiding an abrupt revaluation that would harm exports. Twelve-month non-deliverable forwards rose 0.14 percent to 6.6725 per dollar in Hong Kong, according to data compiled by Bloomberg. The contracts reflect bets the currency will strengthen 2.3 percent from the spot rate of 6.8270. The MSCI World Index of 23 developed nations’ stocks gained 0.1 percent. Stocks weakened in Europe. Unipol Gruppo Finanziario SpA sank 8.9 percent in Milan after Italy’s third- largest insurer announced a share sale and posted a full-year loss. Veolia Environnement SA, the world’s largest water company, slipped 1.4 percent in Paris after JPMorgan Chase & Co. advised selling the stock. Asian Stocks The MSCI Asia Pacific Index increased 1 percent, its biggest advance in more than a week. Japan’s Nikkei 225 Stock Average rose to the highest level since October 2008 and the Shanghai Composite Index rallied 1.3 percent. China led the MSCI Emerging Markets Index 0.3 percent higher, its first gain in three days. Russia’s Micex Index climbed 0.6 percent after the central bank cut its main refinancing rate for the 12th time in less than a year, lowering it a quarter point to 8.25 percent. Credit-default swaps protecting Dubai government debt traded at 405.7 basis points, near yesterday’s closing level of 402.9 basis points, the lowest since November, according to CMA DataVision. The emirate’s government pledged yesterday to support Dubai World. The gain in U.S. futures indicated the S&P 500 may rise for the first time in three days. Confidence among U.S. consumers fell in March for a second month, economists said before the Reuters/University of Michigan final consumer sentiment index due at 9:55 a.m. in New York. U.S. Expansion The U.S. economy expanded at a 5.9 percent annual rate in the final three months of 2009, according to the median estimate of economists surveyed before revised figures from the Commerce Department are released at 8:30 a.m. in Washington. Consumer spending may have increased at a 1.7 percent pace. Treasuries rose, trimming their biggest weekly loss this year, as some investors were lured by yields at a nine-month high. The decline in yields narrowed the spread with swaps to negative 6.9 basis points, from negative 7.3 basis points yesterday. The spread went negative this week for the first time since at least 1988, when Bloomberg began collecting the data. Nickel for delivery in three months rose 2.2 percent to $23,325 a metric ton on the London Metal Exchange, extending its gain this year to 26 percent. Copper, zinc and tin also advanced. Gold for immediate delivery added 0.6 percent to $1,097.15 an ounce. Crude oil rose 41 cents to $80.94 a barrel in New York trading. To contact the reporter on this story: Justin Carrigan in London on jcarrigan@bloomberg.net

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