June 9 (Bloomberg) -- The euro gained for second day against the dollar and yen as stocks and commodities advanced before the European Central Bank announces a decision tomorrow on interest rates. The dollar fell against most major counterparts as Federal Reserve Chairman Ben S. Bernanke reiterated to a congressional panel that the U.S. recovery is being restrained by the housing and commercial real-estate markets and repeated his call for lawmakers to come up with a long-term deficit-reduction plan. The yen fell against most major peers on speculation the global economy will weather Europe's debt crisis. "The stock market rally is positive for sentiment on a near-term basis, and the euro may see a relief rally as risk aversion eases," said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world's largest custodial bank, with more than $20 trillion in assets under administration. "The ECB meeting will be an opportunity for it to comment on how it intends to address the deterioration in financial market conditions and economic outlook." The euro strengthened 0.5 percent to $1.2030 at 10:15 a.m. in New York, from $1.1973 yesterday. The euro appreciated 0.4 percent to 109.91 yen, from 109.51. The dollar was at 91.37 yen, compared with 91.46. The Standard & Poor's 500 Index increased 0.3 percent. Bernanke said in testimony prepared for a House Budget Committee hearing that the U.S. central bank will act as needed to aid financial stability and economic growth after restarting emergency currency-swaps to help contain Europe's debt crisis. Rate Boost in 2011 Record-low U.S. inflation and prolonged unemployment mean the Fed will hold off raising interest rates until 2011, according to economists surveyed by Bloomberg News. The benchmark rate has been at a range of zero to 0.25 percent since December 2008. The central bank's preferred price gauge will rise 1.1 percent this year, the smallest gain in data going back to 1960, and the jobless rate will average more than 9 percent through next year, the median estimate of 65 economists surveyed from June 2 to June 8 showed. The euro earlier fell versus the greenback on speculation the ECB would leave interest rates unchanged and announce further measures to add liquidity to the financial markets. "No one expects a change in rates," Brown Brothers Harriman & Co. currency strategists including Marc Chandler in New York wrote in a note to clients. "Instead, the focus is on liquidity provisions. The market may be disappointed if it expects new lending facilities or an extension of some existing ones." ECB Rate Outlook Economists surveyed by Bloomberg forecast the ECB will leave its key interest rate at a record low until the second quarter of 2011. Sweden's krona rose 0.7 percent to 8.0014 per dollar after seasonally adjusted factory output grew an annual 7.3 percent after rising a revised 6.8 percent the previous month, Stockholm-based Statistics Sweden said in a statement on its website today. The median estimate of five economists surveyed by Bloomberg was for 6 percent. "Many are not convinced yet that the Riksbank will hike rates next month primarily because of European sovereign woes," Brown Brothers strategists wrote in a separate note to clients. "Next month's rate decision is a close call, but we see Sweden as among the short list of candidates to initiate a tightening cycle in the coming period." The odds of Sweden's Riksbank raising interest rates at least 0.25 basis points at its meeting on July 1 rose to 79 percent today, from 57 percent a month ago, according to Credit Suisse data. Brazil Rate Brazil's real rose versus the greenback on speculation the nation's central bank will raise rates today after the economy grew at its fastest annual rate since 1995 in the first quarter. The currency gained 0.5 percent to 1.8447 per dollar. Brazilian central bank President Henrique Meirelles will increase the benchmark Selic rate 75 basis points to 10.25 percent, matching the move in April, according to economists surveyed by Bloomberg. Gross domestic product expanded 9 percent from a year earlier. The figure was higher than the median forecast of 8.5 percent among 41 analysts surveyed by Bloomberg. GDP grew 2.7 percent from the previous quarter. "Most commentators believe that Brazil is starting to overheat and the central bank has to act quickly," Simon Smollet, a London-based strategist at Credit Agricole SA, wrote in a note to clients. "Certainly there seems to be some urgency from the central bank. We expect the central bank to hike 75 basis points to 10.25 percent." The pound rebounded from near its lowest level in almost two weeks against the dollar as the Bank of England started its monthly policy meeting amid speculation it will keep interest rates at a record low to boost the economy. The pound gained 0.6 percent to $1.4553 and was up 0.1 percent to 82.64 pence against the euro. --With assistance from Candice Zachariahs in Sydney. Editors: Greg Storey, James Holloway

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