* World FX rates in 2017 tmsnrt.rs/2egbfVh
* Dollar slips to 6-month low
* Oil lifted by expectations of continued supply cut
* Defense stocks lift Wall Street on U.S.-Saudi arms deal
* Gold, copper, zinc and nickel rise
* Treasury yields edge up as supply offsets political
(Adds Wall Street close; updates throughout)
By Hilary Russ
NEW YORK, May 22 The dollar slipped to a more
than six-month low on Monday, weighed down by an uncertain U.S.
political climate, while oil prices rose on expectations that
crude output cuts would continue and the euro surged.
Wall Street ended higher, lifted by technology stocks and by
defense companies, which gained after U.S. President Donald
Trump announced arms deals of up to $350 billion with Saudi
Arabia over the weekend.
The euro hit a more than six-month high after German
Chancellor Angela Merkel said it was "too weak" because of the
European Central Bank's ultra-low interest rates and money
The dollar last week notched its largest weekly drop since
April 2016 on concerns that turmoil in Washington could delay
Trump's efforts to implement economic stimulus plans. Traders
have also been reassessing their assumptions about the path of
further Federal Reserve interest rate hikes this year.
"The dollar's broad declines are driven by the increasingly
mixed tone to U.S. economic data, which has led to investors
questioning the extent to which the Fed will be raising rates
this year," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington.
"The political climate is also acting as a key headwind for
the dollar," he said.
Tracking the greenback against a basket of major currencies,
the dollar index fell 0.19 percent, with the euro
up 0.31 percent to $1.1239.
"The thing with euro/dollar is that you have quite a
positive mood on the euro at the moment," said ABN Amro FX
strategist Georgette Boele. "And when Merkel makes comments that
the euro is probably too low, then this is taken as another
positive reason to push it higher."
Sterling was also in the firing line, last trading at
$1.2998, down 0.28 percent on the day, after polls showed
Britain's election race tightening and the country's chief
Brexit negotiator again threatened to walk away from EU exit
talks unless the bloc eased its demands.
The Dow Jones Industrial Average rose 89.99 points,
or 0.43 percent, to 20,894.83, the S&P 500 gained 12.29
points, or 0.52 percent, to 2,394.02 and the Nasdaq Composite
added 49.92 points, or 0.82 percent, to 6,133.62.
Some European shares dipped, in part on political concerns
in Spain after its Socialists on Sunday chose former leader and
hardliner Pedro Sanchez to once again head the party.
The pan-European FTSEurofirst 300 index lost 0.11
percent and MSCI's gauge of stocks across the globe
gained 0.54 percent.
Oil prices hit their highest in more than a month on growing
confidence that the Organization of the Petroleum Exporting
Countries and other producers would agree this week to extend
U.S. crude rose 0.73 percent to $51.04 per barrel
and Brent was last at $53.75, up 0.26 percent on the
U.S. Treasury yields were marginally higher as light selling
tied to this week's government and corporate bond supply offset
safe-haven bids underpinned by worries about investigations of
possible links between Trump's campaign officials and Russia.
The yield on benchmark 10-year notes was last at
Spot gold added 0.4 percent to $1,260.41 an ounce.
U.S. gold futures gained 0.55 percent to $1,260.50 an
Copper rose 0.63 percent to $5,718.00 a tonne, while
zinc and nickel prices touched two-week highs
after China launched a regional crackdown on the steel industry,
including production of the two metals.
(Additional reporting by Patrick Graham, Ritvik Carvalho and
Zandi Shabalala in London; Tanya Agrawal in Bengaluru; Danilo
Masoni in Milan; Richard Leong, Saqib Iqbal Ahmed and Scott
DiSavino in New York; Editing by Meredith Mazzilli and Dan