By Justin Carrigan July 28 (Bloomberg) -- The dollar fell and stocks advanced for a 12th day as investors bought higher-yielding assets on speculation improved earnings signal the recession is easing. The Dollar Index dropped as much as 0.4 percent to its lowest level this year at 9:20 a.m. in London. The MSCI World Index of 1,654 companies in 23 developed nations added 0.5 percent, extending the best winning streak since June 2003. Aluminum rose for an 11th day, its longest advance in at least 22 years. “With the risk-appetite switch jammed on, pressure on the dollar and the yen continues to mount,” Steve Pearson, a strategist at Bank of America Securities in London, wrote in a note today. “The move is being led by the commodity block.” More than half of the 86 companies in Europe’s Dow Jones Stoxx 600 Index that reported results since July 8 have beaten analysts’ predictions, according to data compiled by Bloomberg. Companies in the Standard & Poor’s 500 Index have beaten estimates by an average of 11 percent. The U.S. economy probably shrank at a 1.5 percent pace in the second quarter, following a 5.5 percent contraction in the first three months, according to the median forecast of 66 economists surveyed by Bloomberg News. The Dollar Index, which tracks the U.S. currency against six peers including the yen, pound and Swedish krona, fell to 78.315 today, the lowest level since Dec. 18. The pound strengthened for a second day against the dollar, gaining 0.3 percent. The FTSE 100 stock index erased gains after advancing for the 12th consecutive day, the longest winning streak since the index began in 1984. EADS, BBVA European Aeronautic, Defence & Space Co. surged 6.4 percent. The owner of Airbus SAS posted a 69 percent increase in second- quarter profit before some items and said full-year deliveries will at least match the level a year earlier. Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest lender, gained 4.7 percent after second-quarter net income beat estimates. Aluminum climbed 1.7 percent on the London Metal Exchange to $1,857 a metric ton, taking its gain for the year to 20 percent. Copper, up 83 percent this year, rose 0.6 percent to $5,632 a ton. The MSCI Emerging Markets Index of stocks in 22 developing economies added 1.2 percent to 846.69 at 9:21 a.m. in London, the highest since Sept. 22. The benchmark has gained 77 percent from its year low on March 2. U.S. authorities have pledged as much as $12.8 trillion to revive economic growth following the collapse of credit markets in August 2007. BP Plc Chief Executive Officer Tony Hayward said the recovery will be “long and drawn-out.” The U.S. will sell $42 billion of two-year notes today as part of a record $115 billion of sales this week. Government bonds were little changed, with the yield on the benchmark 10-year Treasury rising less than half a basis point to 3.73 percent. The yield on the 10-year German bund increased half a basis point to 3.49 percent. To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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