The dollar snapped two days of declines against the euro, rallying from the lowest level in a month, as traders added to bets the Federal Reserve will raise interest rates by year-end and oil retreated.
The U.S. currency also gained versus the yen after minutes of the Fed's April meeting yesterday showed most policy makers viewed the cut in the target rate to 2 percent as ``a close call,'' indicating the central bank has gone on hold to stem inflation.
U.S. house prices fell less than expected in the first quarter. The Office of Federal Housing Enterprise Oversight said its house price purchase index declined 0.2 percent, after rising 0.3 percent the previous quarter. The median forecast in a survey of 13 economists was for a drop of 1.3 percent.
Futures on the Chicago Board of Trade show traders see a 92 percent likelihood the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25, up from odds of 88 percent yesterday. Traders also see a 32 percent probability the Fed will lift the rate in September to 2.25 percent, up from a 21 percent chance yesterday.
The dollar has fallen 2 percent against the euro since May 8, after European Central Bank President Jean-Claude Trichet said inflation remains the bank's top priority. That signaled policy makers won't cut the 4 percent benchmark interest rate soon.
The pound rose to a three-week high against the dollar after a government report showed U.K. retail sales declined less than forecast in April.

Change % Change Last
Nikkei 225 +52.16 +0.4% 13,978.46
Topix +9.58 +0.7% 1,379.67
FTSE 100 -16.50 -0.27% 6,181.60
CAC 40 +1.19 +0.02% 5,028.74
Xetra Dax +29.50 +0.42% 7,070.33
DOW +24.43 +0.19% 12,625.62
NASDAQ +16.31 +0.67% 2,464.58
S&P 500 +3.64 +0.26% 1,394.35
10yr Note +0.9900 +0.259% 3.921%
NYMEX Crude Oil -2.36 -1.77% 130.81
Gold -10.30 -1.11% 918.30

Japan's stocks rose, reversing early losses, as refiners gained on record crude prices and exporters rebounded on the weakening yen.
Nippon Oil jumped 5.3%, the highest since Jan. 9, while Idemitsu leapt 6.5%. AOC Holdings Inc., whose shareholders include Saudi Arabia, surged 7%. Crude oil, which has doubled in the past 12 months, surged to as much as $135.04 a barrel today, boosting the value of refiners' inventories.
Mazda, the world's only mass producer of rotary engines, climbed 2.9 percent, after falling as much as 4.2%. Funai Electric Co., which gets 65 percent of its overseas sales from North America, advanced 3.7% in Osaka trading, the sharpest jump since May 8.Sanyo, which was bailed by banks including Sumitomo Mitsui Financial Group Inc., slumped 4.9%, the sharpest drop since April 9, and was the worst performer on the Nikkei. The Osaka-based company forecast operating profit that fell short of analysts' estimates by more than a quarter.
Sumitomo Mitsui, Japan's third-biggest publicly traded bank, gained 4 percent, after losing as much as 2.3%. The stock was the biggest contributor to the Topix's rebound.

European stocks advanced, rebounding from two days of losses, as rising telephone shares overshadowed concern record oil prices will curb corporate profits.
Cable & Wireless rose 2.7%. The company may break itself up, sell some businesses or borrow money to return capital to shareholders, Finance Director Tony Rice told reporters on a conference call today.
Telecom Italia advanced 4.6%. Deutsche Bank increased its projections for sales and profit, citing a regulatory decision on termination rates.
Air France slumped 10%, the biggest fall among shares on the Stoxx 600. The airline posted a fiscal fourth-quarter loss of 49 million euros ($77 million) after an early Easter holiday restrained business travel. BHP Billiton Ltd. led a rally in raw-material producers after Sanford C. Bernstein & Co. raised its share-price estimate for the world's biggest mining company by 25% and maintained its ``outperform'' recommendation. BHP shares rose 2.1%. Xstrata Plc, the world's largest exporter of coal used by power stations, added 2.1%.

US stocks closed positive Thursday afternoon, as oil prices took a break from the recent march higher, allowing investors to scoop up select stocks.
International Business Machines Corp. and JPMorgan Chase & Co. led gains in the Dow Jones Industrial Average after the government said first-time unemployment claims decreased by 9,000 last week. Limited Brands Inc. rallied after the operator of the Victoria's Secret lingerie chain posted earnings that topped analysts' estimates. Eight of 10 industry groups in the Standard & Poor's 500 Index rose as the benchmark for U.S. equities rebounded from its biggest two-day tumble since March.
Limited Brands climbed 2.3%. Profit excluding items was 11 cents a share, 3 cents above the average estimate of analysts surveyed by Bloomberg. The company also forecast higher annual earnings than it previously projected.
Utility shares gained after NRG Energy Inc. made an unsolicited offer to buy Calpine Corp. for $9.6 billion in stock. NRG, the second-biggest power producer in Texas, offered 0.534 share for every Calpine share, or 6.7% above yesterday's closing prices, as it seeks to become the largest independent power company in the U.S. NRG lost 4%. Calpine jumped 9.4%.
Dynegy Inc., the owner of power plants in 12 U.S. states, gained for the eight day, rising 2.6 percent to $9.83.
Ford Motor Company announced it will lower production volume of large trucks and sport-utility vehicles, while shifting more focus toward models in-line with consumers' preferences. Ford also trimmed its profit outlook.Swiss banking giant UBS announced plans to raise some $15 billion through a rights offering to existing shareholders. Shares available in the offering will be priced at a 31% discount to yesterday's closing price. Additionally, UBS finalized the sale of $15 billion of subprime and Alt-A mortgage assets to investment management outfit BlackRock (BLK 200.32, -0.46).