(Bloomberg) — The dollar strengthened and Treasuries fell as a Federal Reserve official suggested interest rates may rise as soon as September amid data showing a gain in orders for business equipment. European stocks rallied on optimism a deal on Greece is near.

The Bloomberg Dollar Spot Index jumped 0.9 percent at 9:31 a.m. in New York. The yield on 10-year Treasury notes climbed five basis points to 2.43 percent. The Standard & Poor’s 500 Index added 0.2 percent, within five points of a closing record. The Stoxx Europe 600 Index rallied 1.5 percent while Spain’s 10-year bond yield premium over Germany narrowed to the least in a month.

Fed Governor Jerome Powell said the chances are about 50-50 that the economy will improve enough for the central bank to lift borrowing costs in September. Data showed orders for business equipment rose in May for the second time this year. European leaders agreed to step up talks to secure a breakthrough and end a standoff over aid for Greece.

“When things are looking better and then you hear something more hawkish out of the Fed, people tend to sit on their hands,” said Matt Maley, an equity strategist at Miller Tabak & Co. in Newton, Massachusetts. “Obviously, the Greece situation is coming to a head.”

The S&P 500 is coming off its best week since April, climbing 0.8 percent after Federal Reserve Chair Janet Yellen signaled the central bank will take a gradual approach to raising U.S. interest rates.

Fed Speak

The orders report indicate the worst of the slump in business investment in the oil patch may be over as fuel costs steady, which would alleviate a source of weakness for the economy.

Speaking at a Wall Street Journal event in Washington Tuesday, Powell said his forecast for the economy assumes stronger growth than in the first half of the year, growth in the labor market and a “greater basis for confidence” in inflation returning to 2 percent.

The euro fell 1.5 percent to $1.1175, as Goldman Sachs Group Inc. said quantitative easing in Europe will send the shared currency toward parity versus the greenback.

Greek Prime Minister Alexis Tsipras turned Tuesday to shoring up support at home for his plan to end a five-month standoff with creditors. A key sticking point in a deal is the rate of value-added tax, with the proposed target for 2016 short of creditor demands, according to two European Union officials.

Pessimism, Relief

“The pessimism has been very, very high and so there has to be relief” about Greece, Scott Thiel, who helps oversee BlackRock Inc.’s $4.8 trillion of assets as chief investment officer for fundamental fixed income, said in an interview on Bloomberg Television’s “On The Move” with Mark Barton. “They’ll get some kind of agreement so they’ll be able to meet their obligations.”

Spanish and Italian sovereign securities extended gains from Monday, as the potential for a Greek deal made investors more comfortable owning higher-yielding euro-area debt.

Spain’s 10-year bond yield dropped eight basis points to 2.03 percent. That pushed the yield gap to similar-maturity German bunds, the region’s benchmark, as low as 113 basis points, the tightest spread since May 22. Greece’s fell 56 basis points to 10.60 percent, after dropping 150 basis points on Monday.

The Stoxx 600 climbed for a fourth day, with all 19 industry groups gaining and trading volumes 15 percent above the 30-day average, according to data compiled by Bloomberg. Greece’s ASE Index rose 5.4 percent and Portugal’s PSI 20 Index added 2.7 percent for the biggest gains among western European markets.

China Rebound

Stocks extended gains after an index of euro-area factory and services unexpectedly rose to the highest in more than four years this month.

The MSCI Emerging Markets Index climbed 0.3 percent, poised for the highest close since June 3.

Hong Kong’s Hang Seng China Enterprises Index advanced 1.7 percent and the Shanghai Composite rebounded as trading resumed following a holiday. A preliminary manufacturing gauge rose more than expected Tuesday, while still signaling a contraction.

The Shanghai gauge tumbled 13 percent last week, the biggest drop among global indexes and the most since 2008, as initial public offerings diverted funds from existing equities. About $1.3 trillion was wiped off mainland Chinese equities last week, more than the value of Australia’s entire stock market.

Copper gained 1.6 percent and nickel advanced 2.3 percent. Gold slipped 0.4 percent after two days of declines on speculation European officials will break the impasse over Greece. Platinum rebounded from the lowest closing price in six years.

Oil in New York fell 0.7 percent to $59.96 a barrel before U.S. government data forecast to show crude stockpiles declined for an eighth week. Brent slipped 0.2 percent to $63.23.