By Lukanyo Mnyanda March 30 (Bloomberg) -- The pound climbed to its strongest level in a week against the dollar and gained versus the euro as the U.K.’s economy expanded in the fourth quarter faster than previously estimated and house prices rose this month. The euro erased gains versus the dollar and yen after Greece’s seven-year notes fell during the first day of trading on concern the nation will struggle to contain its deficit. The gain in sterling reduced what was still the biggest quarterly decrease against the dollar in more than a year. “We need confirmation from other releases, but the data is supportive and sterling can detach from recent lows,” said Antje Praefcke, a strategist at Commerzbank AG in Frankfurt. “Investors are still not convinced Greece is out of the woods yet. They do not want to buy the euro strongly because there’s still too much uncertainty.” The pound gained 0.6 percent to $1.5083 at 7:53 a.m. in New York, from $1.4988 yesterday, after earlier reaching $1.5101, the strongest level since March 23. It rose 0.6 percent to 89.41 pence per euro, from 89.96. Sterling’s advance against the dollar pared its decline from Dec. 31 to 6.7 percent, still the biggest quarterly drop since the three months ended in December 2008. The U.K.’s gross domestic product rose 0.4 percent from the third quarter, compared with a previous calculation of 0.3 percent, the Office for National Statistics said today in London. U.K. house prices increased 0.7 percent from February, Nationwide Building Society said. Euro Versus Dollar The euro traded at $1.3486, paring an advance to as high as $1.3537. It was at 124.71 yen, after advancing to 125.46 yen. Europe’s common currency has fallen 5.8 percent against the dollar and 6.3 percent versus the yen since Dec. 31. Greece’s 5 billion euros ($6.7 billion) of seven-year notes dropped after the nation sold the securities yesterday. The yield premium widened about 0.34 percentage point to 3.68 percentage points over benchmark German debt, according to ABN Amro Bank NV’s prices. Prime Minister George Papandreou’s government must raise as much as 10.5 billion euros by the end of May to avoid rekindling the budget crisis that prompted the European Union to step in on March 25 with a rescue plan that backstopped Greece’s finances. The dollar earlier slumped to its weakest level since March 23 against the euro on speculation signs of a global recovery will sap demand for the greenback as a refuge. The yen fell against higher-yielding currencies, dropping 0.7 percent to 12.5718 against the South African rand. ‘Shifting Back’ “People are shifting back toward your average yield- seeking environment,” said Geoffrey Yu, a London-based currency strategist at UBS AG. “If you think the dollar and the yen are negatively correlated to risk and the euro is more sensitive to the other side,” then currencies “are moving in the expected direction,” he said. The Conference Board’s confidence index for U.S. consumers rose to 51 this month from 46 in February, according to the median forecast of 73 analysts in a Bloomberg News survey. The report from the New York-based group is due at 10 a.m. The French economy, the second-largest in the euro area, expanded by 0.6 percent in the fourth quarter, the most since the period through September 2007, data from the statistics office in Paris showed today. South Korea’s won led Asian currencies higher as stocks advanced, boosting demand for regional assets. The won appreciated 0.5 percent to 1,130.10 per dollar. The MSCI Asia Pacific Index climbed 0.9 percent, while the Stoxx Europe 600 Index rose for a second day, adding 0.3 percent. Korean Manufacturing An index measuring expectations of South Korean manufacturers for April climbed to 105 from 101, the Bank of Korea said today. The reading was the highest since the fourth quarter of 2002. New Zealand’s dollar advanced after home-building approvals rose and commodity prices gained. It rose for a fourth day against the dollar in the longest winning streak since January, increasing 0.4 percent to 71.26 U.S. cents. Permits to build homes in New Zealand increased 5.9 percent in February, adding to signs residential construction will help buoy economic growth this year and spur the central bank to raise its 2.5 percent benchmark interest rate. “Risk appetite’s up, and fundamentally the news in Asia is really positive,” said Mitul Kotecha, Hong Kong-based head of global currency strategy at Credit Agricole CIB. “There’s evidence of strong flows coming into the region, and that’s helping to boost Asian currencies as well.” To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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