ECB Cut

The euro rose to 160.69 yen from 160.27, reaching a six- week high, as the Munich-based Ifo institute said its business climate index rose to 104.1 in February, from 103.4 in January. The median estimate in a Bloomberg survey was for a drop to 102.9. After the report, traders pared bets the European Central Bank will lower its target from the current 4 percent level.

The German confidence report underscores the euro zone is holding up reasonably well in face of a U.S. slowdown,'' said Stephen Malyon, a currency strategist at Scotia Capital Inc. in Toronto.

The odds of the ECB lowering borrowing costs fell, with the implied yield on the Euribor futures contract for June rising 4 basis points to 4.16 percent. The yield averaged 0.18 percentage point more than the ECB's benchmark from 1999 until August. A basis point is 0.01 percentage point.

Rand Rally

South Africa's rand climbed 1.4 percent to 7.5581 per dollar, the biggest advance since Feb. 1, as the continent's biggest economy expanded an annualized 5.3 percent in the fourth quarter, from 4.8 percent in the previous three months. Growth was expected to slow to 4.4 percent, the median forecast in a Bloomberg News survey.

The U.S. currency began to decline earlier as a government report showed producer prices rose 1 percent in January, after a 0.3 percent decline the prior month, and more than double the median forecast in a Bloomberg survey.

Higher inflation coupled with slower growth is not a recipe for a stronger currency,'' said John McCarthy, a director of currency trading at ING Financial Markets LLC in New York.

The S&P/Case-Shiller index of home prices in 20 U.S. metropolitan areas fell 9.1 percent in December from a year earlier, the most on record. The Conference Board's index of consumer confidence fell to 75 from 87.3 in January.

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