June 10 (Bloomberg) -- The dollar and the yen weakened against higher-yielding currencies on speculation the global recession is easing, spurring demand for riskier assets. The New Zealand and Australian dollars and South Korean won gained the most against the greenback of the 16 major currencies as stocks rose after a gauge of raw-materials prices climbed to a seven-month high. The pound advanced versus the dollar as a report showed U.K. manufacturing expanded for a second month in April. The dollar slid for a second day against the euro as investors sold Treasuries in favor of higher-yielding assets. “There have been flows out of the U.S. Treasury market and the dollar has entered a possible long-term decline,” said Neil Mellor, a currency strategist in London at Bank of New York Mellon Corp., the world’s largest custodian of financial assets. “There are concerns about the fiscal deficit and where the dollar lies in the world.” The New Zealand dollar rose 1.1 percent to 63.37 U.S. cents at 6:38 a.m. in New York, from 62.71 yesterday. The Australian dollar gained 1.1 percent to 81.02 U.S. cents, from 80.15 cents, and strengthened 1.6 percent to 79.31 yen. South Korea’s won advanced 1.4 percent to 1,246.70 per dollar. The yen slid to 137.88 per euro, from 136.98 yesterday, and slipped to 97.89 per dollar, from 97.38. The dollar weakened to $1.4089 per euro, from $1.4065. The Dow Jones Stoxx 600 Index of European shares rose 2 percent, the biggest gain since June 1, while the MSCI World Index added 1.2 percent. The Reuters/Jefferies CRB Index of commodity prices added 2.5 percent yesterday to the highest level since Nov. 11. Crude oil climbed as high as $71.65 a barrel, the most since Nov. 4. Economic Optimism Treasuries declined, pushing the yield on the 10-year note up two basis points to 3.87 percent, near the highest level since November. “When optimism about the global economy is out there, people feel less need to hold the dollars which they have accumulated for a rainy day,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co., a unit of France’s third-largest bank. “The dollar is likely to remain under pressure.” Benchmark interest rates are 3 percent in Australia, 2.5 percent in New Zealand, and 2 percent in South Korea, compared with as low as zero in the U.S. and 0.1 percent in Japan. Australia’s dollar advanced for a second day as an industry report showed consumer confidence jumped in June, adding to signs the economy may avoid a recession. Dollar May ‘Flip’ The sentiment index increased 12.7 percent from May to 100.1 points, according to a Westpac Banking Corp. and Melbourne Institute survey conducted between June 1 and June 7. It was the first time since January 2008 that the index was above 100, indicating optimists outnumber pessimists. The dollar, which for the past nine months tended to fall amid better economic data, may “flip” as markets associate an improving outlook with a possible tightening of U.S. monetary policy, Bank of America Corp. wrote in a research report today. “With the era of ‘risk on, risk off’ soon to be behind us, the credibility of U.S. fiscal and monetary policy will, in our view, increasingly dictate the outlook for the dollar,” Steven Pearson, a foreign-exchange strategist in London, wrote in the report. A U.S. report tomorrow may show retail sales increased in May for the first time in three months. Sales climbed 0.5 percent, after falling 0.4 percent in April, according to a Bloomberg News survey of economists. The Dollar Index, used by the ICE to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, was at 79.811, after sliding 1.3 percent yesterday. Beige Book Losses in the dollar and the yen were tempered on speculation the Federal Reserve’s so-called Beige Book report today may signal much of the world’s biggest economy remains mired in recession. “Labor market conditions were weak and reports of layoffs, reductions in work hours, temporary factory shutdowns, branch closures and hiring freezes remained widespread,” the Fed said in its previous regional business survey released April 15. Sweden’s krona gained versus the dollar and the euro after Swedish Finance Minister Anders Borg said yesterday the Latvian government should do “what is necessary” to present a responsible economic policy. “Baltic stress is manageable for Sweden’s economy and banking system and the krona remains attractive,” analysts including London-based Ray Farris at Credit Suisse Group AG wrote in a note yesterday. “If conditions in the Baltics were to improve, the krona should rally notably.” The krona strengthened 0.4 percent to 10.7618 per euro from 10.8022 yesterday. It gained 0.5 percent to 7.6449 per dollar.

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