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New York/ London - The US dollar fell broadly on Tuesday after a senior Chinese currency regulator warned about the risks of excessive dollar holdings, while major stock markets rebounded as investors picked up beaten-down shares.
The weaker dollar helped Brent crude oil prices rise back above $115 a barrel though gains were limited by expectations that Opec will raise its production targets this week and by worries that an economic slowdown will erode demand.
World stocks, as measured by the MSCI world equity index, rose 0.5%. The Thomson Reuters global stock index also gained 0.5%. Emerging market stocks rose 0.3%.
The dollar hit a record low against the Swiss franc and a one-month trough versus the euro after Guan Tao of the State Administration of Foreign Exchange said China must be alert to the risk of holding too many dollars at a time when Washington is pursuing loose monetary and fiscal policies.
"It's a sensitive topic for markets and it does seem that China has had its fill of dollars," said BNY Mellon strategist Michael Woolfolk. "The move higher in the euro overnight stemmed from those comments."
The dollar fell as low as 0.8327 Swiss francs . it also slid to 0.5% against a basket of major currencies to 73.556, its lowest in a month,. The euro hit a one-month high of $1.4682 .
The Dow Jones industrial average gained 36.25 points, or 0.32%, to 12 128.97. The Standard & Poor's 500 Index rose 4.30 points, or 0.33%, to 1 290.47. The Nasdaq Composite Index added 4.18 points, or 0.16%, to 2 706.89.
The S&P 500 index closed at a more than two-month low on Monday and has fallen 5.5% since a recent high at the start of May. Some investors look for further volatility and a possible move lower before equities stabilize.
"We did get oversold and we're probably due for this bounce, but I don't think it's anything more than a bounce in a continued downtrend," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
European shares snapped a four-session slide with investors picking up beaten-down stocks, notably in the utilities and basic resources sectors, though worries that the global recovery was stalling capped gains.
The FTSEurofirst 300 index of top European shares was up fractionally at 1 105.21.
Bernanke comments ahead
Investors will look to a speech by Federal Reserve Chairman Ben Bernanke at 3:45 p.m. (1945 GMT) for clues on the US central bank's view of the economic slowdown and on the timing of the Fed's exit from its extremely easy monetary policy.
The dollar has been under pressure in recent months, hurt by worries about the US economic recovery and expectations that the Fed will keep benchmark interest rates near zero for longer even as other major central banks are tightening.
The European Central Bank is expected at a meeting on Thursday to signal a second rise in rates this year, which that could offset worries about a potential Greek debt restructuring.
Brent crude extended gains to above $115 a barrel as the weaker dollar and Middle East turmoil lifted prices, offsetting expected output hikes from Saudi Arabia and other Opec members.
Earlier, Iraqi Oil Minister Abdul-Kareem Luaibi said world oil markets were well supplied and prices were not too high. The comments suggest Iraq may not support the increase in Opec output that Saudi Arabia and other Gulf producers favor.
Brent crude oil was up 1 percent to $115.68 a barrel. On the New York Mercantile Exchange, July crude briefly turned higher before retreating to $98.67 a barrel.
US Treasury debt prices eased on Tuesday as investors set up for an auction of $32bn of three-year notes. Benchmark 10-year Treasury notes were yielding 3.04%, up from 3.00 percent late on Monday.
