An unexpectedly positive German business sentiment report boosted the euro and European stocks on Wednesday, while concerns about the US economy continued to weigh on the dollar. The weakening dollar led to increased interest in commodities like oil and gold, which had recently experienced a decline in prices. Despite a softer US economic outlook, global demand for commodities is expected to remain strong, particularly due to robust economies like China. The Ifo institute reported an improvement in German corporate sentiment in March, with firms expressing a more optimistic view of the economic situation. This positive trend has helped alleviate some of the pessimism surrounding the global economy, with the Ifo report exceeding expectations for the third consecutive month, according to Audrey Childe Freeman, a European economist at CIBC World Markets. "It reinforces the idea that Germany is separating from the euro zone, and also suggests that the ECB will not be lowering rates soon," she stated. The Ifo economic research institute reported an increase in its business climate index to 104.8 from 104.1 in February, based on a survey of approximately 7,000 companies. This rise reduced investors' inclination towards safe assets, causing euro zone government bonds to decrease from their initial highs. This news followed a day where US consumer confidence hit a five-year low in March, and a separate report showed a significant decrease in home values in January, leading to concerns about American spending habits. The FTSEurofirst 300 index initially dropped but later recovered slightly, while Germany's DAX remained steady and London's FTSE 100 index decreased by 0.3 percent. Swiss miner Xtrata experienced a significant loss of approximately 9 percent following the breakdown of takeover talks with Vale, the world's largest iron ore miner. The previous day, European stocks had increased by about 3 percent, led by banks, after JPMorgan's offer to buy Bear Stearns was raised five-fold, alleviating concerns about the impact of the credit crunch on the sector. In Asia, Japan's Nikkei closed 0.3 percent lower, while MSCI's measure of other Asian stock markets rose by 0.6 percent. The MSCI world equity index saw a slight increase of 0.2 percent. The dollar weakened against a variety of major currencies, reflecting ongoing worries about the state of the US economy. The dollar index dropped by 0.6 percent, causing the euro to increase by half a US cent to approximately $1.5646 following the Ifo report. The 10-year Bund yield remained relatively stable at 3.872 percent, while the benchmark 10-year yield for US Treasuries decreased by 2.4 basis points to 3.517 percent. US light crude for May delivery rose by 73 cents to $101.94, and gold slightly increased to $940.50 per ounce from around $934.60 per ounce late in New York on Tuesday.