European Stocks Climb as Dollar Weakens, Oil Slides

(Bloomberg) — European stocks rose to a seven-year high and U.S. equity-index futures signaled shares will rebound after a third weekly decline. The dollar weakened and Treasuries gained before a Federal Reserve meeting this week, while oil touched its lowest level since 2009.

The Stoxx Europe 600 Index advanced 0.6 percent at 6:20 a.m. in New York, with Germany’s DAX rising 1 percent. Standard & Poor’s 500 Index futures added 0.5 percent. The Bloomberg Dollar Spot Index declined 0.3 percent and the yield on 10-year Treasuries fell two basis points to 2.10 percent. West Texas Intermediate crude dropped 0.8 percent to $ 44.47 a barrel.

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European stocks capped a six-week advance on Friday as the euro slid to 12-year low last week, boosting earnings prospects for exporters, after the region’s central bank began a 1.1 trillion-euro ($ 1.2 trillion) quantitative-easing program. While central banks in Europe and Asia take steps to bolster growth, the U.S. is moving closer to raising interest rates. The Fed may remove the word “patient” from its statement this week, giving it more flexibility on the timing of rate changes, according to analysts at banks including Morgan Stanley and BNP Paribas SA.

“It’s a very favorable environment,” said Hendrik Koenig, an equity strategist at B. Metzler Seel Sohn & Co. in Frankfurt. “All the big macro themes right now — QE, the weak euro, central bank divergence, a stronger consumption trend in Germany — are playing for German stocks.”

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Automakers led the Stoxx 600 up after the index advanced for a sixth week, the longest streak since June.

H&M Sales

Hennes & Mauritz AB added 2.3 percent after reporting that first-quarter sales rose more than analysts had projected. Royal DSM NV climbed 3 percent after the Dutch chemical maker agreed to sell a majority stake in a plastics and resins business.

Lafarge SA slipped 4.4 percent and Holcim Ltd. dropped 1.5 percent. The French cement maker said it’s willing to consider revising the share-exchange ratio in its planned merger with the Swiss company. Holcim wrote in a letter to Lafarge last week, saying that it doesn’t intend to pursue the transaction under the terms agreed last July.

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U.S. industrial production probably rose in February at the same pace as in January, and an index tracking manufacturing in the New York region climbed in March, economists said before reports today.

The Shanghai Composite Index rallied 2.3 percent and Hong Kong’s Hang Seng China Enterprises Index of mainland shares increased for a third day, adding 0.9 percent.

Premier Li Keqiang said on Sunday the government will take more steps if China’s growth, which is targeted at about 7 percent this year, drifts toward the lower limit of its range and cuts into employment or wages.

Gulf Stocks

Dubai led shares lower in the Persian Gulf region, with the DFM General Index retreating 2.2 percent to a two-month low. Qatar’s QE Index slid 1.7 percent and Abu Dhabi shares dropped 1 percent.

U.S. oil declined 9.6 percent last week and speculators cut bullish wagers to the lowest in more than two years as falling rig counts fail to cool a supply glut.

WTI crude dropped to as low as $ 43.57, after losing 4.7 percent on Friday and capping a fourth straight weekly retreat. Brent, the benchmark contract for more than half of global oil, fell 1.1 percent to $ 54.06 per barrel following Friday’s 4.2 percent decline. The Bloomberg Commodity Index was little changed near a 12-year low after sliding 3.2 percent last week, the biggest drop since November.

The U.S. oil surplus may soon strain the country’s storage capacity, renewing the slump in prices, the International Energy Agency said Friday. U.S. production will expand this year by about 750,000 barrels a day to 12.56 million a day, the IEA said.

Hedge Funds

Hedge funds and other money managers reduced their net-long position in WTI by 2.5 percent in the seven days ended March 10, U.S. Commodity Futures Trading Commission data show.

The dollar weakened 0.4 percent to $ 1.0540 per euro after appreciating to $ 1.0458 earlier on Monday, the strongest level since 2003. The U.S. currency was little changed at 121.36 yen.

Gain in Treasuries pushed the yield on 30-year notes down three basis points to 2.67 percent.

Longer-maturity bonds also outperformed in Europe, where Germany’s 30-year yield declined one basis point to 0.71 percent while the 10-year rate increased two basis points to 0.28 percent.

To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Stuart Wallace at swallace6@bloomberg.net Justin Carrigan

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