Nov. 28 (Bloomberg) -- The dollar gained the most in two weeks against the euro on speculation traders were scaling back bets on further declines in the U.S. currency as stocks rallied.

The dollar rose against 12 of the 16 most-active currencies, climbing the most versus the Swedish krona and the Swiss franc. It extended its advance against the yen after the biggest gain in three months yesterday. The euro's decline accelerated after it dropped below $1.4775, a level at which traders had orders to sell, said Shigetake Nakayama, a manager on the proprietary- trading desk in London at Bank of Tokyo-Mitsubishi UFJ Ltd.

``This is more of a broad-based move in the dollar than the euro,'' said Kamal Sharma, currency strategist in London at Bank of America Corp. ``What we are seeing is a bit of a relief rally. That's translating into a stronger dollar.''

The dollar rose as much as 0.7 percent to $1.4724 per euro, its biggest gain since Nov. 12, and traded at $1.4732 as of 7:35 a.m. in New York, from $1.4829 yesterday. The dollar fell to an all-time low of $1.4967 on Nov. 23.

European stocks advanced for the first time this week after earnings from Compass Group Plc and Anglo Irish Bank Plc beat analysts' estimates and brokerages recommended buying shares in UBS AG and British Airways Plc. U.S. stock futures also rose.

The U.S. currency gained 0.8 percent versus the yen to 109.88, from 108.97 yesterday, when it strengthened 1.5 percent.

The dollar extended its advance against the euro after a decline in German consumer confidence weakened the case for higher interest rates in the single-currency region.

German Confidence

The GfK AG index slipped more than expected to the lowest since January 2006. The European Central Bank was forced to shelve a planned interest-rate increase in September after the U.S. housing slump pushed up the cost of credit globally, threatening to curb economic expansion.

``GfK was disappointing and that added to the euro sell- off,'' said Neil Jones, head of European hedge-fund sales in London at Mizuho Capital Markets. ``Signs that consumer confidence in euro land has been significantly impacted by the subprime collapse may put an end to the hawkishness we've seen from the European Central Bank.''

GfK's index for December fell to 4.3, from a revised 4.8 in November, the market-research company said in Nuremberg today. The median of 24 economists' forecasts in a Bloomberg News survey was for a reading of 4.4. A subindex measuring German households' willingness to spend fell to the lowest since the summer of 2005, GfK said.

Eroded Competitiveness

The dollar has fallen 1.8 percent versus the euro this month, eroding the competitiveness of the region's exports. The European Commission on Nov. 9 cut its forecast for euro-area growth next year to 2.2 percent from 2.5 percent.

The U.S. currency will strengthen to $1.44 per euro in the first quarter of next year, extending its gain to $1.38 per euro by the end of 2008, according to the median of 36 forecasts compiled by Bloomberg News.

Futures on the Chicago Board of Trade show traders are assigning 98 percent odds that the Fed will lower its target for overnight loans between banks by a quarter percentage point to 4.25 percent on Dec. 11. The chances of a reduction to 4 percent in January are 81 percent.

``The dollar is enjoying a bit of a rebound as some investors reappraise their expectations for Federal Reserve rate cuts,'' said Adam Cole, senior currency strategist at RBC Capital Markets Ltd. in London. ``We have five or so rate cuts priced in by the end of next year, and some are thinking that's a little overdone.''

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

Last Updated: November 28, 2007 07:40 EST