Stocks, oil and metals rise as recession eases; dollar drops

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: Stocks rose, extending the MSCI World Index’s longest monthly winning streak since the credit-market seizure began, after economic reports from Japan and India signaled the worst of the global recession may be ending. Crude oil climbed and the dollar weakened.

The MSCI World added 0.9% at 11:02 am in London, extending its advance in May to 7.9%. The gauge of 23 developed nations has climbed for three straight months, the best performance since the middle of 2007, when the value of securities tied to subprime mortgages collapsed, freezing credit markets.

Oil rose 1.2% to $65.87 in New York, the highest in almost seven months, as investors speculated more than $13 trillion in government stimulus measures will alleviate the worst contraction since the Great Depression after $1.47 trillion in losses and writedowns at the world’s biggest financial companies. Japan’s industrial output increased the most since 1953 in April, India’s economy grew more than analysts estimated last quarter, and Poland expanded in the first quarter, government reports showed.

“There’s certainly some relief at the moment as the rate of deterioration appears to have slowed,” said John Anderson, who helps oversee $3 billion at Rensburg Fund Management in London. “The banking sector is out of the intensive care unit. But I suspect it will take a while before we fully recover given the sheer amount of debt out there.”

The US dollar weakened 1% against the euro and 0.9% against the yen, extending its drop after the Dollar Index slid below 80. The gauge tracks the greenback against the euro, yen, pound, Swiss Franc, Canadian dollar and Swedish krona.

The dollar dropped 1.5% versus the Australian dollar and 1.7% against the New Zealand dollar, as signs of a recovery stoked demand for commodity-exporting countries. The greenback also slipped as South Korea’s National Pension Service, which had about $187 billion of assets at end-2008, pared its allocation for Treasuries over the next five years.

The pound rose to the highest level since November, poised for its biggest monthly gain in 24 years, after a report showed UK house prices unexpectedly jumped in May. The pound strengthened to as much as $1.6128, before trading up 1.1% at $1.6111.