U.S housing starts may have risen in April from previous record lows

Builders probably broke ground on more homes in April after starts plunged to a near-record-low level the month before, amid signs the housing slump now in its fourth year may be reaching a bottom. Record-low mortgage rates, prices nearly a third lower than peak levels and tax incentives for first-time buyers are helping to clear a glut of unsold new homes. An easing in the housing slump is viewed as essential to an economic recovery later this year. Still, a sustained turnaround will take time because unemployment is at a 25-year high, foreclosures persist and builders are grappling with tight credit conditions. Confidence among U.S. homebuilders in May increased to the highest level since September, capping the first back-to-back gain since February 2008, the National Association of Home Builders/Wells Fargo index showed yesterday. A reading below 50 means most respondents view conditions as poor.

Sterling gained against the dollar and the euro on Monday, buoyed by rising equities, while investors eyed economic data due later this week to see whether Britain's recession is easing. The pound rose against the euro, which came under widespread selling pressure after data on Friday added to the view that the 16-nation euro zone's economic recovery may take longer than Britain's. Britain has been focused on a parliamentary expenses scandal for the past week, but the row has had little impact on investor appetite for the British currency. Leading British shares .FTSE recovered from an initial 1 percent drop to surge 1.8 percent. With Monday a quiet day for UK data, investors were looking ahead to this week's releases, including inflation data on Tuesday, the minutes to the Bank of England meeting on Wednesday, and public finances and retail sales figures Thursday. The GBP/USD is currently trading $1.5475 as of 8:58am, London Time.

The yen weakened against higher- yielding currencies as an advance in Asian stocks and optimism the global recession is easing damped demand for safer assets. The yen fell against all of the 16 most-traded currencies before a U.S. government report that may show housing starts climbed from near a record low, boosting the appetite for riskier investments. “Equities are rising and the worldwide recession may have bottomed out,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA. “This augurs well for risk-taking appetite and is negative for the yen and the dollar.” The Australian dollar climbed to a one-week high against the U.S. currency after central bank Governor Glenn Stevens said the economy is in good shape to benefit from a global recovery as interest-rate cuts drive domestic demand and a pickup in China stokes exports. The USD/JPY is currently trading at 96.65 as of 9:05am, London Time.

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