Brazilian stocks gained for a second day after the country’s consumer confidence jumped to the highest level in eight months and increases in metals prices sent producers higher.

European stocks rose for the first time in three days as a rally in health?care and food shares overshadowed lower?than?estimated German business confidence and North Korea’s first nuclear test in three years.

A key measure of German business sentiment rose in May and Japan raised its economic outlook for the first time in three years in further signs the worst of the global recession may be over, with stability seen later in 2009. German think tank Ifo’s business climate index, based on a poll of 7,000 firms, rose to 84.2 in May from 83.7 in April but below a consensus forecast for 85.0.

China's official foreign exchange manager is still buying record amounts of US government bonds, in spite of Beijing's increasingly vocal fear of a dollar collapse, the Financial Times reported. The newspaper said China had little choice but to keep pouring the bulk of its growing reserves into US Treasuries, which remains the only market big enough and liquid enough to support its huge purchases. Federal Reserve Board Vice Chairman Donald Kohn said the U.S. economy may get a $1 trillion boost in coming years from the central bank’s purchases of government and mortgage debt, along with $175 billion in extra tax revenue.

The euro fell for the first time in seven days against the dollar after Moody’s Investors Service downgraded its rating outlook for two Bulgarian banks, reviving concern over the health of the European banking system. The 16?nation currency also weakened versus the yen after Germany’s financial regulator said the debt of the country’s banks will blow up “like a grenade” unless they participate in the government’s bad bank plan. The won declined for a second day on concern North Korea will conduct more nuclear tests after the communist state said it successfully held an underground explosion yesterday.