By Herbert Lash
NEW YORK (Reuters) - The dollar rose to fresh 2018 highs on Monday while oil prices surged to their highest since late 2014, driven by declining Venezuelan crude production and worries the Unites States could re-impose sanctions on Iran.
The crude surge lifted energy stocks in Europe and on Wall Street, with European shares supported by strong results and gains in Nestle
The euro broke below $1.19 for the first time this year on weaker-than-expected German industrial orders and declining euro zone investor sentiment.
Investors increased bets that rising U.S. interest rates would continue to boost the dollar, while traders unwound their bearish positions on the greenback.
An index that tracks the dollar against a basket of leading currencies <.DXY> climbed to 92.974, its highest since December. The index was last up 0.20 percent at 92.750.
"The general view right now is that the dollar is probably going to continue to move a bit higher against the euro in particular, maybe against the yen as well," said Larry Hatheway, chief economist at GAM Investment Solutions.
The euro could slip to $1.1750 or even $1.15 as a support level as the Federal Reserve tightens monetary policy and the European economy trends weaker, he said.
"There's a general appreciation the Fed is going to move at least twice again this year and the consensus is shifting toward three more moves this year."
Venezuelan oil exports came under threat after U.S. oil major ConocoPhillips
The move could further crimp PDVSA's declining oil output and exports.
Widespread expectations that President Donald Trump will withdraw the United States from the Iranian nuclear pact also weighed on crude prices.
Nestle was the biggest contributor to the 0.59 percent advance in the pan-European FTSEurofirst 300 index <.FTEU3> of leading regional shares. Oil giants Royal Dutch Shell
On Wall Street, the S&P energy index <.SPNY> was the biggest gainer among the 11 major sectors, rising 1.2 percent.
The Dow Jones Industrial Average <.DJI> rose 102.22 points, or 0.42 percent, to 24,364.73. The S&P 500 <.SPX> gained 13.12 points, or 0.49 percent, to 2,676.54 and the Nasdaq Composite <.IXIC> added 66.72 points, or 0.93 percent, to 7,276.34.
Euro zone government bond yields slid as the unexpected fall in German industrial output was seen as encouraging the European Central Bank to prolong an unwinding of stimulus.
The yield on the benchmark 10-year German bund
Gold slipped, snapping three days of gains, as the U.S. dollar index strengthened.
U.S. gold futures
(Reporting by Herbert Lash in New York; Editing by Dan Grebler and James Dalgleish)
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Updated Date: May 08, 2018 01:05 AM