Euro Gains Against Dollar as Stocks Rise, Before ECB Decision

By Anna Rascouet and Ron Harui

Sept. 3 (Bloomberg) -- The euro climbed against the dollar as stocks advanced and on speculation the European Central Bank will increase its economic-growth projections when it decides on interest rates today.

The euro also rose versus the yen, snapping a seven-day decline, as Europe’s Dow Jones Stoxx 600 Index increased for the first day in four and China equities posted their biggest gain in six months. ECB President Jean-Claude Trichet will present revised growth and inflation forecasts at a press conference today in Frankfurt. The Swedish krona fell after the nation’s central bank repeated its outlook for rates to stay on hold.
“The ECB meeting is likely to be supportive of the euro,” said Lee Hardman, a currency strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “Trichet is going to acknowledge the recent signs of improvement in the economy.”

The euro rose to $1.4297 as of 10:40 a.m. in London, from $1.4264 in New York yesterday. The 16-nation currency climbed to 132.17 yen, from 131.54. Japan’s currency depreciated to 92.45 per dollar, from 92.22.

The krona weakened 0.1 percent to 10.3087 against the euro, after falling as much as 0.5 percent following the decision by the Riksbank, which left its main rate at 0.25 percent and also said it will provide 100 billion kronor ($13.8 billion) in loans to Sweden’s banks to help lower lending rates.
The ECB will keep its main refinancing rate at a record low of 1 percent at its meeting today, according to all 58 analysts surveyed by Bloomberg News. The central bank won’t raise rates before the third quarter of 2010, another survey shows.

Retail Sales 

The euro gained even as retail sales in the region declined for a 14th straight month in July as rising unemployment prompted consumers to rein in spending.

Store revenue declined 1.8 percent from a year earlier after sliding 2 percent in June, the European Union’s statistics office in Luxembourg said today. Economists predicted a drop of 2.2 percent, according to the median of 10 forecasts in a Bloomberg News survey. In the month, sales fell 0.2 percent.

The yen fell against all 16 most-traded currencies as stocks in China rose on speculation the government will adopt measures to boost equities after the Shanghai Composite Index fell into a bear market. The Shanghai gauge climbed for a third day, gaining 4.8 percent.
To contact the reporters on this story: Anna Rascouet in London arascouet@bloomberg.netRon Harui in Singapore at rharui@bloomberg.net
Last Updated: September 3, 2009 06:06 EDT