The dollar fell against the euro for a second day as stocks rose amid speculation policy makers are moving closer to resolving a deadlock on U.S. borrowing and to finding an agreement on Europe’s debt crisis. The Dollar Index declined for a second day as the U.S. currency slid versus most of its major peers tracked by Bloomberg. Spanish and Italian bonds rose a second day before French President Nicolas Sarkozy and German Chancellor Angela Merkel meet to seek common ground on tackling the region’s debt woes. Sweden’s krona advanced as the rally in shares across the globe stoked demand for higher-yielding assets. “Hope springs eternal,” said Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in London. “Equities are probably going to continue to do quite well and since the main funding currency is the dollar, the net effect is going to be dollar-negative.” IntercontinentalExchange Inc.’s Dollar Index, which gauges the greenback against the currencies of six major U.S. trading partners, slid 0.4 percent to 74.912 as of 10:44 a.m. in London. The dollar slipped 0.4 percent to $1.4201 per euro and was 0.4 percent weaker at 78.92 yen. The euro was little changed at 112.12 yen. The MSCI Asia Pacific Index of regional shares advanced 1.2 percent and the Stoxx Europe 600 Index rose 0.7 percent after Apple Inc. said its third-quarter profit more than doubled. Futures on the Standard & Poor’s 500 Index were up 0.4 percent, while the yield on the 10-year Treasury note was four basis points higher at 2.92 percent. Debt Summit Euro-area leaders are preparing for the second meeting in a month to hammer out a solution to the Greek debt crisis, which pushed the euro to $1.3837 last week, the lowest level since March. Sarkozy will dine with Merkel in Berlin tomorrow morning before leaving for the debt summit in Brussels, his office said in an e-mailed statement. The gathering could be a “make-or- break moment” for the euro region, Greek Prime Minister George Papandreou said in an interview. The yield on 10-year Italian bonds fell seven basis points to 5.66 percent and the Spanish 10-year yield was also seven basis points lower, at 6.02 percent. Officials are considering steps previously rejected by Germany, including the use of precautionary credit lines, to prevent the crisis spreading, a person close to the talks said. Easing ‘Uncertainty’ Other options up for discussion include enabling the main 440 billion-euro rescue fund to lend to recapitalize banks, said the person, who declined to be named because the talks are in progress. Nothing will be decided until leaders convene. President Barack Obama endorsed a plan from the Gang of Six, a bipartisan group of U.S. Senators, that may help speed up negotiations on the deficit and raising the federal debt ceiling. The government says it has until Aug. 2 before its ability to pay its debt expires. “The market is currently starting to see an easing in this state of heightened uncertainty,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “With expectations the global economy will rebound, that’s starting to give some support to the higher-risk currencies.” Sweden’s krona strengthened against all 16 of its major peers, appreciating 0.5 percent against the dollar to 6.4667 and 0.4 percent versus the euro to 9.1748. The South Korean won climbed 0.4 percent to 1,055.30 against the U.S. currency, according to data compiled by Bloomberg. The Singapore dollar reached S$1.2139 against its U.S. counterpart, an all-time high, before trading at S$1.2146. Homes Data Purchases of previously owned homes, which make up about 95 percent of the U.S. market, climbed 1.9 percent in June from May’s six-month low to a 4.9 million annual rate, according to the median projection of economists surveyed by Bloomberg News before a National Association of Realtors’ report today. A Chinese leading indicator climbed for the third straight month, rising 0.5 percent to 155 in May, The Conference Board said on its website today, citing a preliminary reading. The gauge is designed to capture prospects over the coming six months. The People’s Bank of China set its daily fixing 0.14 percent higher at 6.4592 per dollar, the strongest level since July 21, 2005, the day China ended a fixed exchange rate and said the yuan would be allowed to fluctuate against a basket of currencies. To contact the reporters on this story: Paul Dobson in London at pdobson2@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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