The dollar rose the most against the euro since April as Russias Finance Minister Alexei Kudrin said his nation has full confidence in the U.S. currency and a drop in stocks encouraged demand for safety.

The greenback advanced versus 14 of its 16 major counterparts after Kudrin said two days ago in an interview following the Group of Eight meeting that it was too early to speak of an alternative to the worlds main reserve currency. The euro fell versus the dollar after the European Central Bank said commercial banks in the 16-nation euro region may lose a further $283 billion by the end of next year.

The pace of dollar losses is slackening materially, said Todd Elmer, a currency strategist at Citigroup Inc. in New York. When you look at the factors that were feeding dollar depreciation, notably the rally in risk appetite and concern over the long-term impact of U.S. policies, it looks like theyve both run ahead of themselves.

The dollar climbed as much as 1.9 percent to $1.3756 per euro, the strongest level since May 21, before trading at $1.3794 at 4:06 p.m. in New York, compared with $1.4016 on June 12. The intraday gain in the greenback was the biggest since April 27. The dollar appreciated 0.9 percent to $1.6302 against the pound from $1.6443 and climbed 1.2 percent to 1.0924 Swiss francs from 1.0791.

Ten-year Treasury notes rose for a third day, the longest stretch of gains in a month. The yield on the securities fell 0.07 percentage point to 3.73 percent.

Stronger Yen

The yen advanced the most in 11 weeks against the euro, climbing as much as 2.6 percent to 134.44 from 137.89 as a drop in U.S., European and Asian stock markets discouraged investors from buying higher-yielding assets financed by loans in Japan. The yen appreciated 0.6 percent to 97.82 per dollar from 98.43.

The Federal Reserve Bank of New Yorks general economic index dropped in June to negative 9.41 from minus 4.55 in the prior month, the bank said. Readings below zero for the Empire State index signal factory activity is shrinking.

Today is a typical risk-aversion move, said Ron Leven, an executive director at Morgan Stanley in New York. The market has to re-price for less growth going forward.

The G-8 finance ministers said in a statement on June 13 they will start planning exit strategies for when sustainable growth returns. Its still too soon to roll back budget deficits and bank bailouts, they said.

Dollar Index

The Dollar Index gained for a second day after Russias Kudrin said the fundamentals of the U.S. currency are still in good shape. He spoke following the meeting in Italy of the G-8 finance ministers.

The greenback fell 7.8 percent to 1.9514 Brazilian reais and 2.2 percent versus the euro in the past month partly on speculation record U.S. budget deficits will undermine the currency as a store of value.

The dollar is still the global reserve currency and most likely to remain the reserve currency for the foreseeable future, said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. Certainly theres no basis for seeing a major shift away from the dollar by global central banks.

Kudrins comments came just days after President Dmitry Medvedev questioned the dollars status, joining the Chinese central banks Governor Zhou Xiaochuan in indicating the world may need another benchmark for settling international debts.

BRIC Meeting

Leaders of the BRIC nations -- Brazil, Russia, India and China -- may use their meeting tomorrow to press the case that their 15 percent share of the world economy and 42 percent of currency reserves should give them more policy influence.

International investors bought $11.2 billion more in long- term U.S. equities, notes and bonds than they sold in April, compared with net purchases of $55.4 billion in the previous month, the Treasury Department reported today. Economists surveyed by Bloomberg News predicted investors would buy a net $60 billion of long-term securities.

The euro fell versus the dollar after the ECB said in its June Financial Stability Report that losses at commercial banks in the euro zone may almost double from about $365 billion already reported.

New Zealands currency dropped versus the U.S. dollar for the first time in three days, decreasing 1.9 percent to 63.10 cents. The currency known as the kiwi pared its gain in the past three months to 20 percent.

The South Pacific nations farmers face at least a 12 percent drop in milk prices as the nations currency rises at its fastest pace since 1985, according to Auckland-based Fonterra Cooperative Group Ltd., the worlds largest dairy exporter.

The Dollar Index, which the ICE uses to track the currency against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, increased 1.2 percent to 81.120 today.

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