May 13 (Bloomberg) -- The dollar fell to a seven-week low against the euro and oil rose on speculation the first global recession since World War II is moderating.

The U.S. currency weakened 0.2 percent against the euro as of 10:45 a.m. in London and declined 0.3 percent versus the yen. The Dollar Index dropped to its lowest level in four months as investor demand for the currency as a refuge from financial turmoil waned. Crude oil, priced in dollars, climbed 1.3 percent.

“The dollar remains under pressure,” Steven Pearson, a London-based currency strategist at Bank of America-Merrill Lynch, wrote in an e-mailed report today. “Economists are now lining up to call some form of cyclical turn, and economic data are for the most part continuing to surprise to the upside.”

China, the world’s biggest commodity consumer, today reported a 14.8 percent jump in April retail sales after saying yesterday crude-oil imports rose 14 percent. Former Federal Reserve Chairman Alan Greenspan said late yesterday it’s “very easy to see” further improvement in financial markets, and Bank of England Governor Mervyn King indicated today that the recession is easing.

Crude oil for June delivery rose as much as 79 cents to $59.64 a barrel on the New York Mercantile Exchange, after the American Petroleum Institute late yesterday reported falling U.S. crude stockpiles. Copper for delivery in three months gained 0.8 percent to $4,630 a metric ton on the London Metal Exchange, advancing for a second day.

China Rally

China’s Shanghai Composite Index climbed 1.7 percent to a nine-month high as consumer companies rallied, led by a 6.9 percent advance in Suning Appliance Co., the nation’s biggest home-appliance retailer by market value.

European stocks declined for a third day. The Dow Jones Stoxx 600 Index dropped 0.6 percent to 205.05 after swinging between gains and losses at least nine times. Amsterdam-based ING Groep NV and Bulgari SpA declined after reporting earnings that missed analysts’ estimates.

Futures on the Standard & Poor’s 500 Index declined 0.2 percent.

“The fundamental outlook is still relatively dampened,” said Stefan Bielmeier, Frankfurt-based equities strategist at Deutsche Bank AG, in an interview. “The market is now pricing in a V-shaped recovery, which is not our central view. I think the gains are overdone,” he said.

The dollar fell for a second day against the euro, to $1.3642 from $1.3648. Dollar-denominated commodities tend to move in the opposite direction to the currency as investors seek alternative holdings. The Dollar Index, which tracks the currency against the U.S.’s biggest trading partners, fell 0.3 percent to 82.091.

U.S. Treasuries snapped three days of gains after former Comptroller General David Walker wrote in the Financial Times that the U.S. may lose its AAA debt rating because the government can’t control spending. The yield on the benchmark 10-year note was little changed.

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

Last Updated: May 13, 2009 06:11 EDT