The dollar weakened against all 16 major peers, with the Australian, South African and New Zealand currencies surging at least 2.6 percent.
The S&P GSCI Index of commodities climbed 0.8 percent and is up 3.6 percent in three days. Zinc, copper and aluminum rose more than 5.2 percent to lead gains today. Among 24 commodities tracked by the index, only six declined.
Commodities are set for a ''difficult environment" in 2012, UBS AG said, citing Europe's debt crisis and a "hard landing" in China, the biggest raw-materials consumer. The People's Bank of China cut the amount of cash that lenders must set aside as reserves for the first time since 2008 as Europe's debt crisis dims the outlook for exports and growth.
More than 27 stocks advanced for every one that declined in the Stoxx 600, sending the benchmark gauge up 3.6 percent and extending its four-day rally to 9.1 percent. Barclays Plc surged and Deutsche Bank AG rallied more than 6 percent. BP Plc, Europe's second-biggest oil producer, climbed 5 percent and BHP Billiton Plc, the world's largest mining company, jumped 6.2 percent.
Ratings Cuts
European stocks fell earlier after S&P cut debt ratings on lenders from Bank of America Corp. to Goldman Sachs Group Inc. to UBS AG. More than $3 trillion has been erased from the value of global equities this month as rising borrowing costs in Italy and Spain signaled Europe's debt crisis was worsening.
The yield on the 10-year Treasury note rose nine basis points to 2.09 percent. Germany's one-year yield dropped nine basis points to minus 0.01 percent, sinking below zero for the first time ever. Italy's 10-year bond yield slid 22 basis points to 7.02 percent.
Default Swaps Drop
The cost of insuring against default on European corporate debt fell, according to traders of credit-default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 33 basis points to 758.5, according to JPMorgan Chase & Co. at 3 p.m. in London. A decline signals improved perceptions of credit quality.
The MSCI Emerging Markets Index added 2 percent, trimming this month's drop to 6.7 percent. Benchmark gauges in Brazil, Russia, South Africa and Turkey gained at least 2.8 percent. Poland's WIG20 Index jumped 4.8 percent after a report showed the economy grew more than economists forecast in the third quarter. The Shanghai Composite Index earlier fell 3.3 percent after central bank adviser Xia Bin said China's policy "fine- tuning" doesn't mean credit controls will be loosened.