NEW YORK: The US dollar dropped to its lowest level this year and government bonds fell further yesterday as concerns mounted about rising US debt levels after investors questioned the strength of its AAA credit rating.

The dollar, on track for its biggest weekly fall in two months, took the brunt of growing worries about the US fiscal outlook after Standard & Poor’s on Thursday said it might cut Britain’s AAA credit rating because of soaring public debt. Oil slipped below $61 a barrel on credit worries related to the United States, the world’s top energy consumer, but losses were limited by data suggesting Chinese oil demand jumped 3.9 percent in April.

Yet US stocks rose as investors snapped up shares of multinationals, including McDonald’s Corp., in anticipation a weaker dollar would underpin profitability from abroad.

A leading index of European shares ended lower for a second day in a row even as benchmark indexes in Britain, Germany and France ended higher.

Gold prices climbed to a fresh two-month high, breaching $960 an ounce for the first time since late March, as the dollar’s slide boosted buying of bullion as a currency hedge. “The general theme today is clearly broad-based US dollar weakness, largely triggered by mounting concerns over the US government debt triple-A rating,” said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.

Shares of energy companies on both sides of the Atlantic rose, helping boost the broader US and UK equity markets on bets that overseas demand would support energy prices.

A weaker dollar can make US assets more appealing to some investors, and multinationals benefit when they convert overseas earnings into dollars. Trading volumes were thin ahead of long US and British public holiday weekends.

Shares of Sears Holdings Corp. were up almost 16 percent and a top boost on Nasdaq one day after the owner of the Sears and Kmart chains posted a surprise quarterly profit.

“Investors are coming to a realization that interest rates are heading higher and the dollar is going to be under pressure,” said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.

“Energy is moving as China continues to stockpile and buy all the commodities they can,” Lancz said. “I think you have that play of a weaker dollar and stronger commodities right now. Multinationals are going to be big plays, anybody doing anything overseas.”

At 1 p.m., the Dow Jones Industrial Average was up 56.71 points, or 0.68 percent, at 8,348.84. The Standard & Poor’s 500 Index was up 5.41 points, or 0.61 percent, at 893.74. The Nasdaq Composite Index was up 10.65 points, or 0.63 percent, at 1,705.90.

The FTSEurofirst 300 index of top European shares ended down 0.18 percent at 856 points.

Yields on benchmark US and European government debt rose, with US Treasuries rising to six-month highs as bunds and UK gilts sold off. At the height of selling, yields of US 10-year notes hit 3.45 percent, their highest since November. The price on the US 10-year note was down 19/32 in price.

The 2-year US Treasury note was down 1/32, with the yield at 0.89 percent.

The S&P warning about Britain’s AAA credit rating sparked worries of possible similar rumblings for the US Treasury.

The dollar fell against major currencies, with the US Dollar Index off 0.68 percent at 79.919. Against the yen, the dollar fell 0.04 percent at 94.41.

The euro rose 0.95 percent at $1.4024.

US light sweet crude oil fell 7 cents percent, to $60.98 a barrel.

Spot gold prices rose $4.00 to $957.40 an ounce.

Asian shares lost ground after gaining initially.

The MSCI index for Asian stocks outside Japan fell 0.8 percent, but were on track to finish the week about 3.3 percent higher.

The Nikkei average fell 0.4 percent yesterday.