The euro strengthened for the first time in five days against the dollar and German bonds retreated as Italy sold all the debt it planned at an auction and Greece’s economy shrank less than economists estimated. Stocks retreated while oil led commodities higher.

The euro appreciated 0.5 percent to $1.2346 at 9:30 a.m. in New York. The yield on 10-year German bunds rose five basis points. The Standard & Poor’s 500 Index lost 0.2 percent, retreating after its longest rally since 2010, and the Stoxx Europe 600 Index slipped 0.3 percent. Shares sank the most in four weeks in Shanghai as Bank of America Corp. cuts its growth outlook for China. Oil added 0.8 percent, while wheat fell more than 2 percent and copper lost 1.2 percent.

Italy sold 8 billion euros ($9.8 billion) of one-year bills at a yield of 2.767 percent, up from 2.697 percent at the previous auction. Greece’s economy contracted 6.2 percent in the second quarter, compared with 7 percent forecast in a Bloomberg survey. Stocks dropped earlier after Japan said growth slowed more than economists anticipated.

“Demand held up well” at Italy’s auction, Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e-mailed comment. “Borrowing costs more or less held steady, which, all things considered, is probably not a bad result.”

The cost to insure against a default by Italy using credit swaps fell four basis points. Investors bid for 1.69 times the amount of 364-day bills offered today, up from 1.55 times on July 12.

The euro gained against all 16 of its most traded counterparts, advancing 0.6 percent against the yen.

Stocks Retreat

The S&P 500 retreated after six straight gains, its longest advance since December 2010. The index had rallied for five straight weeks and has rebounded 10 percent from a five-month low on June 1.

The Stoxx 600 (SXXP) slipped after capping 10 weeks of gains, its longest rally in six years. Julius Baer Group AG dropped 6.3 percent, its biggest slide in 11 months, after agreeing to pay about 860 million Swiss francs ($879 million) to buy the wealth- management business outside the U.S. of Bank of America’s Merrill Lynch unit. Nokia Oyj retreated 2.4 percent as Danske Bank A/S said the mobile-phone maker may soon sell new shares.

Mideast Tensions

Oil rose 0.8 percent to $93.65 a barrel in New York amid concern that political tension in the Middle East may lead to supply disruption. The U.S. said one of its guided-missile destroyers collided with an oil tanker near the Strait of Hormuz in the Persian Gulf.

Israel will hold home defense drills this week as the Haaretz daily reported that the nation is considering a strike against Iran over its nuclear program. The shekel tumbled 1.2 percent against the dollar.

The MSCI Emerging Markets Index dropped 0.4 percent after four weeks of gains. The Shanghai Composite Index lost 1.5 percent as Bank of America cut its 2012 growth forecast for China to 7.7 percent from 8 percent. South Korea’s Kospi Index slipped 0.7 percent. Russia’s Micex Index rose 1.4 percent.

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net