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 The prospect that Greece and its partners will find common ground in
talks later in the day and reach an agreement that would prevent
Greece having to leave the euro zone helped push low-risk government
bonds yields higher. However, a rise in the price of safe-haven gold
testified to the uncertain outcome.
The meeting of euro zone finance ministers is due to begin at 1400
GMT.
The MSCI all-country world stocks index, which has risen in recent
days on prospects for a Greek deal and after last week's ceasefire
deal for Ukraine, touched its highest since Sept. 22.
Tokyo's Nikkei closed at its highest since July 2007, buoyed by a
record close on Friday in the U.S. S&P 500 index and after data
showed Japan emerged from recession in the final quarter of 2014,
although its 0.6 percent growth was less than forecast.
U.S. financial markets will be closed on Monday for the Presidents'
Day holiday.
The euro rose 0.3 percent to $1.1413 and gained 0.2 percent to
135.37 yen.
"This can quickly turn sour for the euro if there is no deal today,"
said Susanne Galler, a strategist with Jefferies in London.
"The market consensus is for them to do a deal by the end of this
week. But we think that if there's no deal today and the clock
starts ticking then the euro will look increasingly vulnerable."
The pan-European FTSEurofirst 300 stocks index was last down 0.1
percent and Germany's DAX , which hit a record high on Friday, was
down 0.4 percent.
Athens' volatile stocks index fell 4.4 percent, having risen 5.6
percent on Friday. Greek three-year bond yields rose 170 basis
points to 17.44 percent, way below last week's 21.8 percent peak.
"I'm not too worried for now. I don't think that Germany can afford
to let Greece leave the euro zone, and the Greeks themselves will
have to compromise a little bit. So I think we'll reach a half-way
house compromise," said Clairinvest fund manager Ion-Marc Valahu.
Greek Prime Minister Alexis Tsipras, elected last month on a pledge
to scrap austerity measures imposed under Greece's international
bailouts, said on Sunday he expected difficult negotiations but was
"full of confidence".
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French Finance Minister Michel Sapin hinted at a slight easing of
euro zone opposition to Greek requests for an end to austerity and a
new debt deal, saying Europe must respect the political change in
Athens. However, German Finance Minister Wolfgang Schaeuble said in
a radio interview on Monday he was "very sceptical" there would be a
deal.
Greece's current bailout deal runs out on Feb. 28.
BENCHMARK BONDS
Cautious optimism over Greece helped push core euro zone government
bond yields higher. Benchmark German 10-year yields rose 0.3 basis
points to 0.346 percent.
The dollar was broadly weaker. It fell 0.2 percent against a basket
of major currencies.
The yen rose 0.1 percent to 118.60 to the dollar and sterling,
buoyed by recent policymaker comments viewed as hawkish, hit a
six-week peak of $1.5440 before retreating.
The oil price held on to last week's gains after Kuwait's oil
minister said lower levels of supply would support prices in the
second half of this year. Brent crude was last up 1.3 percent at
$62.33 a barrel. Oil topped $60 a barrel last week for the first
time since December as the number of oil rigs in the United States
fell.
Gold, often sought as a safe haven in times of market turmoil, rose
before the Greek talks and on dollar weakness.
Spot gold last traded at $1,234.10 an ounce.
(Additional reporting by Patrick Graham and Sudip Kar-Gupta in
London and Wayne Cole in Sydney; Editing by Susan Fenton)
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