The dollar weakened on concern that the Federal Reserve will signal it has no intention of raising interest rates with the global economy in its worst recession since World War II. Metals rose, buoying emerging-market stocks.

The U.S. currency lost 0.2 percent against the euro at 9:50 a.m. in London, 1 percent versus the Norwegian krone and 0.9 percent compared with the New Zealand dollar. Copper led an advance in industrial metals. The MSCI Emerging Markets Index rose 1.9 percent, the biggest increase in two weeks, and the Dow Jones Stoxx 600 Index of European shares rebounded from its worst two-day decline since April.

“Speculation about ongoing low-rate policy by the Fed is a burden to the U.S. dollar,” a team of analysts led by Viola Stork at Helaba Landesbank Hessen Thueringen in Frankfurt wrote in a research note today. There is an “expectation that the Fed is not going to signal any change in its rate policy today,” the report said.

The chances that the U.S. central bank will increase its target interest rate for overnight loans by the end of the year diminished to 40 percent from 50 percent a week ago, based on trading in Fed funds futures. Policy makers’ determination to prop up the world’s biggest economy prompted investors to seek higher returns outside the U.S. The Organization for Economic Cooperation and Development said today the world’s most- industrialized economies will contract 4.1 percent this year and grow 0.7 percent in 2010.  Read the rest of this entry »