Equities rise as euro recovers and dollar weakens

NEW YORK (Reuters) - Stock markets around the world rallied on Monday, with U.S. shares recovering after an extended period of weakness as the U.S. dollar weakened and eased concerns about its impact on corporate profits, while the euro recovered from a 12-year low.

European shares jumped, with German stocks surging to a record high, while Wall Street rebounded after three straight weekly declines.

The euro rose 1 percent to $1.06 after Italy's central bank governor expressed concerns about the pace of its fall to 12-year lows as the European Central Bank launched quantitative easing.

It had fallen to $1.0457 in the Asian session, its lowest since January 2003. The euro has lost roughly a quarter of its value against the dollar since mid-2014 and suffered its biggest weekly fall since September 2011 last week, shedding 3.2 percent.

The U.S. dollar index <.DXY>, which measures the greenback against a basket of currencies, fell 0.9 percent.

The strength in the dollar "has put a lot of worry on (equities) investors," said Nick Colas, chief market strategist at brokerage ConvergEx, in New York. "We're looking for a floor for the euro and are just happy its not plummeting like it has been for the last six months."

European shares <.FTEU3> rose 0.7 percent while Germany's DAX <.GDAXI> was up 1.9 percent at 12,133, a record level. The MSCI International ACWI Price Index <.MIWD00000PUS> rose 0.9 percent.

The Dow Jones industrial average <.DJI> was up 160.45 points, or 0.90 percent, at 17,909.76. The Standard & Poor's 500 Index <.SPX> was up 17.90 points, or 0.87 percent, at 2,071.30. The Nasdaq Composite Index <.IXIC> was up 37.90 points, or 0.78 percent, at 4,909.66.

The benchmark 10-year U.S. Treasury note was up 9/32, the yield at 2.077 percent.

Investors were looking ahead to the Federal Reserve's policy decision on Wednesday. Recent weak U.S. inflation and retail sales data have not derailed expectations the Fed will tighten monetary policy. Views that higher rates and a stronger dollar will hit U.S. corporate profits have dragged on shares.

Many investors expect the Fed to remove its pledge to remain "patient" about raising rates for the first time since 2006. Economists polled by Reuters split almost evenly on whether a rate increase will come in June or later in the year.

Oil prices continued to tumble, with U.S. crude dropping 2.5 percent to a six-year low of $43.71 per barrel on expectations of oversupply. The International Energy Agency said on Friday a global glut of oil is growing and U.S. production shows no sign of slowing. Brent was 2.3 percent lower at $53.42.

Gold prices fell 0.3 percent, the 10th decline in the past 11 sessions. Silver was flat while copper rose 0.3 percent.

(Reporting by Ryan Vlastelica; Editing by Dan Grebler)

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