The euro rose against the dollar and the Swiss franc as rising stock markets reduced demand for the safest assets amid optimism that Europe’s economic recovery will be sustained. Europe’s common currency had its first back-to-back gains against its Swiss counterpart this month. The Dollar Index dropped for a third day before the Federal Reserve releases minutes from its April 26-27 meeting, after which Chairman Ben S. Bernanke signaled the economy still requires monetary support. The pound fell against the euro as minutes of the Bank of England’s May 5 policy meeting showed the majority of officials said tightening policy could hurt the recovery. “There’s clearly some degree of relief and that’s being shown in the euro,” said Jane Foley, a senior currency strategist at Rabobank International in London. “There are certainly signs of stability, though there are still jittery undertones, which are going to make the market vulnerable.” The euro gained 0.2 percent to $1.4270 at 9:43 a.m. in London. It appreciated to 1.2550 Swiss francs, from 1.2531 yesterday in New York. The dollar weakened 0.4 percent to 81.06 yen. The euro fetched 115.65 yen, from 115.91. The Stoxx Europe 600 Index climbed 0.6 percent, rebounding from a four-week low. The MSCI Asia Pacific Index increased 1.1 percent today, snapping a four-day decline, while Standard & Poor’s 500 Index futures rose 0.4 percent. Recovery ‘Undeterred’ Europe’s recovery is becoming more solid and is undeterred by tensions in sovereign-debt markets, European Union Economic and Monetary Commissioner Olli Rehn said. The base of the expansion is “broadening from exports to domestic demand, and thus the recovery is becoming more solid and self-sustaining,” he said at a conference in Brussels today. The British pound declined 0.3 percent to 87.84 pence per euro and was little changed versus the dollar at $1.6250. Andrew Sentance maintained his call for a half-point increase in the key rate from a record low of 0.5 percent. Chief Economist Spencer Dale and Martin Weale continued a push for a quarter-point increase, the Bank of England statement showed today in London. Governor Mervyn King and the other five members of the Monetary Policy Committee voted for no change. Adam Posen kept up a call for more bond purchases. IntercontinentalExchange Inc.’s Dollar Index, which measures the greenback against the currencies of six U.S. trading partners, fell 0.3 percent to 75.200. The dollar has lost 4.3 percent this year, according to Bloomberg Correlation- Weighted Currency Indexes. The yen has weakened 4.3 percent, while the euro is 2.7 percent stronger, the gauges show. U.S. Stimulus “We don’t hear any talk about rate increases in the U.S., while such expectations are supporting the euro,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The Fed is printing dollars aggressively, but we have yet to see inflation concerns rise. That means the U.S. is far away from exiting stimulus measures.” Bernanke, at his first press conference following a policy decision last month, said the economy still requires monetary support while the need to contain inflation means further easing is unlikely. Fed policy makers kept the target rate for overnight lending between banks at zero to 0.25 percent. The rate has remained at that level since December 2008. The euro region’s refinancing rate is at 1.25 percent. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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