European stocks rise but Asian shares decline

While U.S. markets were closed for Memorial Day on Monday, European stocks rose, rebounding from the first weekly loss in a month. Asian shares, meanwhile, fell after Japan’s top central banker indicated that interest rates may rise as the economy improves.

Oil prices retreated for a fifth day, and South Africa’s rand weakened while the yen and gold climbed.

Asian stocks also declined Tuesday morning, with the regional equities gauge extending its longest losing streak in more than six months. The drop came as Chinese Premier Li Keqiang said his country is confronted by “huge challenges.�

In Europe on Monday, Fiat, the Italian automaker, and Vivendi, the French media and telecommunications company, led European shares higher.

“Some investors think that the correction is over and they are prepared to go back into the market,� Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which oversees about $22 billion, said in a telephone interview. “The auto sector is leading the advance with Fiat.�

Bank of Japan Gov. Haruhiko Kuroda, speaking Monday, cited an April Bank of Japan report indicating that rates could rise 1 to 3 percentage points in an improving economy without causing instability.

The yen rose against the dollar after last week’s 1.9% increase, the biggest since the five days ended June 1, 2012. It is still down 19% in the last six months on Japanese Prime Minister Shinzo Abe’s pledge to stem deflation.

In the U.S., the Conference Board’s index of consumer sentiment was expected to climb to 71 this month from 68.1 in April, according to the median estimate of economists surveyed by Bloomberg before the New York-based private research group releases the data Tuesday.

The MSCI Emerging Markets Index added 0.2% on Monday after the biggest weekly decline in seven weeks. Benchmark gauges in India, Poland and Taiwan rose at least 0.9%, while the Philippine Stock Exchange Index tumbled 2.4%, the most since June 4.

The Shanghai Composite Index added 0.2% as environmental-protection companies gained. China won’t sacrifice the environment to ensure short-term economic growth, President Xi Jinping said Friday. The Hang Seng China Enterprises index of mainland stocks listed in Hong Kong rose for the first time in five days, advancing 0.3%.