Dollar loses ground as stocks, oil gain - MarketWatch

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By Deborah Levine & Laura Mandaro , MarketWatch

The decline was SPArked by global financial officials refraining from calling for a halt to the greenback's multi-month slide.

The dollar Index /quotes/comstock/11j!i:dxy0 ( Index Future - Spot Price"> DXY 76.35 , +0.47 , +0.61% ) , a measure of the U.S. currency against a trade-weighted basket of rivals, fell to 76.668 from 77.09 in late New York trading Friday.

The euro bought $1.4657, up from $1.4576 on Friday.

Stocks extended their advance in the afternoon, with the S&P 500 Index /quotes/comstock/21z!i1:in\x ( SPX 1,071 , +6.01 , +0.56% ) finishing up 1.5% and the Dow industrials /quotes/comstock/10w!i:dji/delayed ( INDU 9,865 , +78.07 , +0.80% ) gaining more than 100 points. Crude-oil Futures closed above $70 a barrel. See Futures Movers.

Supporting equities, the Institute for Supply Management said its index of the services industry rose to 50.9% in September, the highest since May 2008. Economists had been expecting a rise to the 50% mark, up from 48.4% for ISM services in August. See Economic Report.

/quotes/comstock/11j!i:dxy0 DXY 76.35 , +0.47 , +0.61%

"ISM was a shot in the arm," said Brian Dolan, chief currency strategist at Forex.com. "A lot of risk trades are being put back on," which weighed on the dollar.

The U.S. dollar has tumbled this year as investors have turned toward higher-yielding currencies and assets, such as Stocks, in the belief these would get a sharper boost from economic recovery. In recent weeks, some non-U.S. finance officials have mentioned the importance of a stronger dollar and its role in the recovery of economies that rely on exports to the U.S.

But such language was absent from the Group of Seven joint communique, released by developed nations' finance ministers at the close of their weekend meeting in Istanbul.

The greenback started off the U.S. trading session lower, playing off the communique's no specific mention of the dollar. Instead, officials repeated that countries would continue to monitor foreign-exchange rates and welcomed China's "continued commitment to move" toward more flexible rates. Read more on G7.

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"The G7 failed to mentioned U.S. dollar weakness, opting instead for a general warning against excessive volatility in currency markets," said T.J. Marta, founder and chief strategist at Marta on the Markets, in emailed commentary. "Consequently, the U.S. dollar is down against most major currencies."

Remarks by euro-zone officials last week had led to heightened expectations that the statement would include language specifically calling for a stronger dollar.

Remarks at the conference by Japanese Finance Minister Hirohisa Fujii signaled again that the government would step in if it believed the yen's movements had become excessive, news Reports said.

"As I have said in Tokyo, we will take appropriate steps if one-sided movements become excessive," he told a post-G7 joint conference, according to Dow Jones Newswires.

Strategists said those comments helped boost the dollar and other currencies against the yen. Fujii has in recent weeks issued repeated warnings about the willingness of Japan to intervene in foreign-exchange markets after having initially signaled comfort with the yen's recent strength.

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