©2015 Bloomberg News
Stephen Kirkland and Callie Bost
(Bloomberg) — The dollar rose to a three-week high amid speculation U.S. interest rates will be increased this year. European stocks climbed to a record and American equities advanced with oil, while Treasuries fell after a bond auction.

The Bloomberg Dollar Spot Index added 0.8 percent by 5:12 p.m. in New York, to the highest level since March 19. The Stoxx Europe 600 Index rallied 1.1 percent to an all-time high, and Chinese shares in Hong Kong climbed to the highest level in more than four years. The Standard & Poor’s 500 Index rose 0.5 percent, above its 50-day average price as U.S. crude increased 0.7 percent. Yields on 30-year Treasuries added seven basis points to 2.60 percent after the U.S. sold $13 billion of debt. Fewer Americans filed jobless claims in the past four weeks than at any time in almost 15 years, a report Thursday showed. The data came a day after minutes of the Federal Reserve’s last meeting suggested the first rate increase since 2006 is still on the table for this year. German industrial production expanded in February, a sign the region’s largest economy was starting to recover as the European Central Bank prepared to start its unprecedented bond buying program. “If you’re a high-frequency trader, you don’t want to go home short tonight,” Paul Zemsky, the head of multi-asset strategies at Voya Investment Management LLC, which oversees $213 billion, said by phone. “The Hang Seng broke out to new highs and the Euro Stoxx did the same. Do you want to go home short with another strong night tonight?”

Minutes Mulled
Minutes from the Fed’s March meeting, held before the release of last week’s weaker-than-forecast payrolls data, showed officials were split on when rates would be raised. While several policy makers pushed to increase borrowing costs in June, others argued for later this year and a couple favored holding off until 2016. The greenback strengthened against all but two of its 16 major peers Thursday. The dollar added 1.1 percent to $1.0660 per euro and rose 0.4 percent versus the yen. Only the Australian and New Zealand currencies gained. The dollar index, which tracks the U.S. currency versus 10 counterparts, has gained 6.3 percent this year as the Fed’s intention to tighten policy contrasted with easing and stimulus elsewhere. In Europe, negotiations between Greece and its creditors are also continuing. “The minutes that we saw yesterday were surprisingly hawkish,” said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange Inc. in Washington. U.S. economic and monetary-policy divergence from Europe and Japan “continues to be the main driver here. That’s why we believe that the longer term trend in the dollar will remain positive.”

Europe Divergence
Europe’s Stoxx 600 has rallied 19 percent this year as the ECB launched its quantitative-easing program. The Fed’s own stimulus helped U.S. shares more than triple in value from a 12- year low reached in March 2009. The S&P 500 has fallen 1.2 percent from a March 2 record amid concern the stronger dollar and tumbling oil prices will hurt company earnings. Analysts have slashed corporate profit projections, predicting a slump through September. Earnings fell 5.8 percent in the first quarter, according to estimates, after having seen an increase as recently as January. Alcoa Inc. lost 3.4 percent Thursday, falling for the first time in six days after the company said there will be an oversupply of aluminum as it kicked off the U.S. earnings season. The largest American producer’s first-quarter profit beat estimates, while sales lagged behind.

Earnings Anticipation
Bed Bath & Beyond Inc. declined 5.4 percent, leading retailers lower after reporting lower-than-estimated earnings and a weaker outlook. Halliburton Co. and Anadarko Petroleum Corp. added more than 3.2 percent as oil advanced. Health-care companies climbed as Mylan NV reached an all- time high, adding another 2.5 percent to a 15 percent rally Wednesday after it offered to buy Perrigo Co. for $28.9 billion. “People are getting ready for earnings season which won’t really kick in until next week,” said Jim Paulsen, chief investment strategist at Wells Capital Management, which oversees $351 billion. “In the meantime, there are deals and buyouts pushing us around a little.” Treasuries declined after the U.S. sold $13 billion in 30- year bonds amid demand that matched the least in almost a year. While overall appetite for the securities fell compared with the last 10 auctions, buying by a group of investors that includes foreign central banks, known as indirect bidders, was above average.

Greek Markets
U.S. 30-year debt carries a yield that is higher than that of 16 from 18 developed-market nations as global central banks implement stimulus measures to boost economic growth and inflation, even as the Fed looks to raise borrowing costs. The ASE index of Greek stocks added 1.1 percent and bonds gained, sending 10-year yields 27 basis points, or 0.27 percentage point, lower to 11.11 percent. Greece secured an increase in emergency funding available to its banks as Finance Minister Yanis Varoufakis said he’s confident of reaching an aid agreement with European partners this month. The ECB’s Governing Council raised the cap on Emergency Liquidity Assistance provided by the Bank of Greece by 1.2 billion euros ($1.3 billion) to 73.2 billion euros in a phone conference, two people familiar with the discussions said. That was more than the 700 million-euro increase granted last week. An ECB spokesman declined to comment.

The MSCI Emerging Markets Index advanced for a ninth day, the longest rally in a year, with the gauge rising 0.7 percent.
Hong Kong
Hong Kong’s Hang Seng China Enterprises Index, which tracks mainland Chinese stocks listed in the city, jumped 2.6 percent to the highest level since November 2010. The Shanghai Composite Index slipped 0.9 percent, falling for the first time in six days and retreating from a seven-year high. Mainland Chinese investors almost used up their quota for the day to buy Hong Kong stocks through the city’s Shanghai exchange link. Hong Kong shares are rallying after valuation discounts in the city reached the most extreme levels since 2011 and mainland authorities made it easier for domestic funds to use the cross-border bourse link. West Texas Intermediate crude rose 0.7 percent to $50.79 a barrel in New York, while Brent crude added 1.8 percent to $56.57. OPEC member Iran, which reached a preliminary nuclear accord with world powers on April 2 that could lead to oil exports flowing more freely, will only sign a deal that secures the lifting of all sanctions, President Hassan Rouhani said on TV Thursday.

Oil dropped the most in two months Wednesday after U.S. Energy Information Administration data showed stockpiles surged by 10.95 million barrels last week, further expanding record supplies.

Gold for immediate delivery declined 0.7 percent to $1,194.72 an ounce, the lowest level in more than a week. Silver fell for a fourth day, the longest retreat in almost a month. Soybean futures fell to a five-month low after the U.S. said world supplies will be bigger than estimated in March.

The Bloomberg Commodity Index slipped 0.4 percent in a second day of declines, bringing its 2015 drop to 5.3 percent. –With assistance from Emma O’Brien in Wellington, Inyoung Hwang, Cecile Vannucci, David Goodman, James Herron and Shelley Smith in London, Choong En Han in Kuala Lumpur and Nick Gentle in Hong Kong.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Callie Bost in New York at cbost2@bloomberg.net To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net Emma O’Brien