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Stocks in Europe and Asia declined while the dollar strengthened Monday, amid growing conviction that the Federal Reserve would raise short-term interest rates later this year.

The prospect of higher rates tends to weaken stock markets, which have been boosted by years of ultraloose monetary policy.

The Stoxx Europe 600 inched down 0.2% in the early minutes of trading, following losses in Hong Kong and Australia and small declines on Wall Street. Markets in the U.K. were closed for a holiday.

Fed Chairwoman Janet Yellen said Friday at a summit in Jackson Hole, Wyo. that the case for a rate rise had strengthened in recent months.That statement was later reinforced by Fed Vice Chairman Stanley Fischer, who suggested that the U.S. central bank could act as soon as next month.

Rising expectations for U.S. rates sent the dollar to a two-week high against the yen in Asian trade, with the dollar last up 0.5% against the yen at ¥ 102.3340. The Nikkei Stock Average rose 2.3%, as a weaker yen tends to help exporters such as auto makers and electronics parts makers. Shares elsewhere in Asia fell, however, with Hong Kong's Hang Seng down 0.4% and Australia's S&P ASX 200 down 0.8%.

Prices for dollar-denominated commodities fell as the dollar continued to strengthen. Brent crude oil was down 1.5% at $49.38 a barrel, while gold retreated to a month's low and was last down 0.4% at $1,320 an ounce.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

August 29, 2016 04:25 ET (08:25 GMT)

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