With a downtrend in commodity prices intact, the U.S. dollar rose broadly on Monday, hitting a two-year high against the pound and leaving investors scurrying to buy back the U.S. currency and sparking a rebound in Asian stocks.
Recent reports showing shrinking or no economic growth in Britain, the euro zone and Japan have lifted the attraction of the dollar as an alternative investment, especially with crude oil prices trading more than $30 below a record high hit in July.
A rally in the dollar stalled last week after hitting a six-month high against the euro, but an upward trend in the U.S. currency is expected to continue.
Even Warren Buffett, chairman of conglomerate Berkshire Hathaway and longtime dollar detractor, came to the currency’s aid on Friday when he said in a television interview that he had no bets against the dollar.
‘‘The combination of incremental weakness in the European economy and the lower oil prices should keep the pressure’’ on the euro versus the dollar, Nizram Idris, currency strategist with UBS in Singapore, said in a note.
Asian stocks rebounded from a two year low as the drop in oil prices back below $120 a barrel bolstered shares of companies sensitive to energy prices, though trading volumes across the region were quite thin, suggesting a lack of conviction among investors.
The Nikkei 225 share average in Japan ended up 1.7 percent, its highest gain in two weeks, led by Honda Motor, the nation’s second-largest car maker, after Toyota.
The MSCI pan-Asia stocks index was up more than 1.5 percent, after hitting on Friday its lowest since July 2006.
The MSCI Asia-Pacific ex-Japan index rose 1.2 percent.
The Australian benchmark share index rose 1.7 percent, helped by rallying of shares in the country’s top banks.
The Hang Seng index in Hong Kong led the region, up 3.5 percent — its highest single-day jump in five months — after plumbing a one-year low last week.
Shares of the offshore oil producer Cnooc rose 4.3 percent and were among the biggest boosts to the index, with the company expected to report solid first-half results on Wednesday.
Taiwan stocks rebounded from a three-week low, rising 1.7 percent, while the main indexes in Korea, India, China and Singapore all gained less than 0.4 percent.
The euro fell 0.4 percent in Asian trade to $1.4721, about a cent away from last week’s low.
The British pound fell as low as $1.8405, its lowest since July 2006. The pound was hurt by data on Friday showing that British gross domestic product was unchanged in the second quarter, compared with an initial estimate of 0.2 percent growth, supporting the case for lower interest rates to spur activity.
Oil crept above $115 in Asian trade after suffering the biggest daily decline since 2004 on Friday.
‘‘The easing of Tropical Storm Fay and the pullout of Russian troops from Georgia has taken some risk premium out of the market,’’ said Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney. ‘‘But there will be some degree of geopolitical tensions as long as Russia still has troops stationed in Georgia.’’ U.S. light crude rose about a dollar to above $115.50 a barrel, though it is not far from its four-month closing low of $112.87 touched a week ago.
The large drop in crude so far, however, has not been enough to entice fund managers to take on more risk for higher returns. Some instruments used to measure risk have been reflecting relatively low market volatility, and equity valuations have become attractive.
Still, regional risk measures show that investors were frozen by caution rather than ready to dive back into markets in search of bargains.
‘‘Even with oil prices down, the global liquidity crunch remains very much with us,’’ said Clive McDonnell, regional strategist with BNP Paribas in Hong Kong.
‘‘U.S. and European portfolio managers continue to reduce risk in their portfolios; emerging markets are the higher-risk asset class, hence we are suffering disproportionately,’’ he said.