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 European shares gained more than 1 percent to reach three-week highs
and the risk premium that investors demand to hold Italian 10-year
government bonds over German Bunds fell to its lowest for more than
a month.
Wall Street was also expected to open higher, according to stock
index futures.
The euro missed the party, though. It fell more than 1 percent
against a dollar boosted by further evidence of U.S. economic
strength and against the yen and sterling.
Greece presented new proposals on Monday that euro zone leaders
welcomed as a basis for a possible agreement to unlock aid and avert
default and a potential exit from the euro.
"It now appears that we will have a short-term solution to the
problem," said Andreas Clenow, hedge fund trader and principal at
ACIES Asset Management.
But some euro zone leaders cautioned that much work still needed to
be done, and some Greek lawmakers reacted angrily to concessions
offered by Athens.
The pan-European FTSEurofirst 300 index <.FTEU3> rose 1.2 percent.
France's CAC 40 index <.FCHI> rose a similar amount and Germany's
DAX <.GDAXI> 1.0 percent. Greek stocks soared 4.5 percent.
Also fuelling the rally were better-than-expected data on factory
and service sector activity in France, Germany and the euro zone
overall, according to Markit's preliminary June purchasing manager
indexes.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> was up 0.7 percent. Japan's Nikkei <.N225> jumped
1.9 percent to a fresh 15-year high.
China's CSI 300 index <.CSI300> of the biggest listed companies in
Shanghai and Shenzhen closed up 3.2 percent.
Chinese factory activity showed signs of stabilizing in June. The
HSBC/Markit flash manufacturing PMI edged up to a three-month high
of 49.6 from 49.2, still below the 50 mark that separates expansion
from contraction.
Low-risk German 10-year government bond yields fell 1 basis point to
0.88 percent.
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Yields on 10-year bonds from Italy and Spain, two countries whose
debt markets have felt some contagion from Greece in recent weeks,
were down 7 and 6 bps at respectively. The spread of Italian 10-year
yields over German equivalents tightened to its narrowest since
mid-May.
EURO DOWN
The euro weakened 1.0 percent against a stronger dollar after data
on Monday showed sales of existing U.S. homes rose to a 5 1/2-year
high in May. That kept the Federal Reserve on track to raise
interest rates later this year, which lifted the dollar 0.5 percent
against a basket of currencies.
The euro last traded at $1.1220, having hit $1.1440 on Thursday. The
yen was down 0.2 percent at 123.58 per dollar.
The U.S. housing data and the progress on Greece pushed U.S.
Treasury yields higher. Ten-year yields were at 2.38 percent, up
from 2.36 percent in New York on Monday.
Oil prices were barely changed as the European PMI data and optimism
over Greece offset the prospect of oversupply. Brent crude <LCOc1>
was flat at $63.39 a barrel.
Gold held on to losses as the Greece talks and stronger equities
reduced its safe-haven appeal. Spot gold was last steady at
$1,182.10 an ounce.
(Additional reporting by Atul Prakash and Patrick Graham in London
and Lisa Twaronite in Tokyo; Editing by Larry King)
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