July 17 (Bloomberg) -- U.S. stocks gained, the dollar weakened and French 10-year bond yields fell to a record as signs of a deteriorating economy stoked speculation the Federal Reserve will hint at further stimulus. The Standard & Poor’s 500 Index rose 0.3 percent at 9:30 a.m. in New York and the dollar weakened against most major counterparts. The Stoxx Europe 600 Index swung between gains and losses. France’s 10-year yield tumbled as much as eight basis points to 2.07 percent and Austria’s two-year rate dropped below zero for the first time. Fed Chairman Ben S. Bernanke will deliver his semi-annual report on the economy and monetary policy before Congress today, after data yesterday showing a contraction in June retail sales. German investor confidence declined for a third month, the ZEW Center for European Economic Research said. The U.S. probably will report industrial output strengthened in June, according to the median of 81 economist estimates compiled by Bloomberg. “There will be some more action from the Federal Reserve,� said Ewen Cameron-Watt, chief investment strategist in London at the BlackRock Investment Institute, part of BlackRock Inc., which manages about $3.7 trillion of assets. “The U.S. economy remains in a slow-growth environment.� A third monthly drop in U.S. retail sales showed limited employment gains are taking a toll on the biggest part of the economy. The International Monetary Fund cut its 2013 forecast for global economic growth yesterday to 3.9 percent from 4.1 percent as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India. The cost of living in the U.S. was little changed in June, a sign inflation may stay subdued as Fed officials have predicted. Industrial production in the U.S. increased 0.4 percent, a Fed report said today, topping the median estimate of 0.3 percent. Economic Surprise The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, was at minus 64 yesterday, near the almost 11-month low of minus 64.9 reached last week. The ZEW index of investor and analyst expectations, which seeks to predict economic developments six months in advance, fell to minus 19.6 from minus 16.9 in June. The S&P 500 rebounded following yesterday’s 0.2 percent drop, its seventh in eight sessions. Goldman Sachs Group Inc. rose after reporting second- quarter profit that exceeded analysts’ estimates and selling its hedge-fund administration unit to State Street Corp. Yahoo! Inc. advanced after the company that owns the biggest U.S. web-portal named Google Inc. veteran Marissa Mayer as chief executive officer. European Shares Among European stocks, Petroleum Geo-Services ASA, the world’s third-largest surveyor of oil and gas fields, surged 7.2 percent in Oslo after raising its full-year forecast. Rival TGS Nopec Geophysical ASA climbed more than 4 percent. Alcatel-Lucent SA plunged 19 percent to a three-year low after France’s largest telecommunications-equipment supplier said it expects to miss a 2012 profitability target and posted a second-quarter loss. German two-year note yields fell to a record low of minus 0.061 percent, while Spain’s two-year notes slipped, pushing the yield four basis points higher to 4.67 percent after the nation auctioned 3.56 billion euros ($4.38 billion) of bills. The rate on five-year U.S. debt was little changed at 0.6 percent, after reaching a record-low 0.577 percent yesterday. Currencies, Corn The euro appreciated was little changed at $1.2281 and climbed 0.4 percent to 97.14 yen. Japan’s currency weakened for the first time in four days, slipping 0.3 percent to 79.11 per dollar. Corn rose 0.8 percent and touched the highest price since June 2011 amid the worst U.S. drought in a generation. About 31 percent of the crop was in good-or-excellent condition by July 15, down from 40 percent a week earlier, the U.S. government said yesterday. That’s the worst rating for this time of year since a drought in 1988. The cost of insuring European corporate debt declined, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated borrowers falling 9 basis points to 663.5. The MSCI Emerging Markets Index added 0.8 percent, heading for its highest close since July 10 and a third day of gains. The Shanghai Composite Index rose 0.6 percent from its lowest close since March 2009 after the government said it will boost railway infrastructure investment and forecast economic growth will pick up in the second half. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong jumped 1.7 percent. Benchmark indexes gained in South Korea, Russia and South Africa. --With assistance from Paul Armstrong, Andrew Rummer and Paul Dobson in London. Editors: Stuart Wallace, Michael P. Regan To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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