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Global shares hit their highest since September on Monday and the euro firmed, with investors cautiously optimistic that euro zone finance ministers would reach a deal to shore up Greece’s dwindling finances.
The prospect that Greece and its partners will find common ground in the talks and reach an agreement that would prevent Greece having to leave the euro zone, helped push low-risk government yields higher. However, a rise in the prices of safe-haven gold testified to the uncertain outcome.
Euro zone meet
The meeting of euro zone finance ministers is due to begin at 1400 GMT.
The MSCI all-country world stocks index touched its highest since September 22.
Tokyo’s Nikkei closed at its highest since July 2007, buoyed by a record close on Friday in the US S&P 500 index and after data showed Japan emerged from recession in the final quarter of 2014, although 0.6 per cent growth was less than forecast.
US financial markets will be closed on Monday for the Presidents’ Day holiday.
Euro vs other currencies
The euro rose 0.3 per cent to $1.1416 and gained 0.2 per cent 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 up 0.1 per cent and Germany’s DAX, which hit a record high on Friday, was down 0.2 per cent.
Athens’ volatile stocks index fell 3.7 per cent, having risen 5.6 per cent on Friday.
Greek bond yields
Greek three-year bond yields rose 146 basis points to 17.21 per cent, way below last week’s 21.8 per cent peak.
Ahead of the euro zone finance ministers’ meeting, Greek Prime Minister Alexis Tsipras had said on Sunday he expected difficult negotiations but was “full of confidence’’.
However, German Finance Minister Wolfgang Schaeuble said in a radio interview on Monday he was ‘very sceptical’’ about the talks.
Tsipras’s left-wing Syriza party won parliamentary elections last month on a pledge to scrap austerity measures imposed under Greece’s international bailouts. Germany and other euro zone countries say Athens must honour its commitments.
The current deal runs out on February 28.
Benchmark bonds
Cautious optimism over Greece helped push core euro zone government bond yields higher. Benchmark German 10-year yields rose 1.2 basis points to 0.355 per cent.
Greek 10-year yields were barely changed at 9.52 per cent.
Ten-year U.S. Treasury yields held steady at 2.047 per cent and the dollar was broadly weaker. It fell 0.2 per cent against a basket of major currencies.
The yen rose 0.1 per cent to 118.60 to the dollar and sterling, buoyed by recent policymaker comments viewed as hawkish, hit a six-week peak of $1.5440.
Crude oil, gold
Oil prices fell but strong demand for refined products kept it close to recent highs. Brent crude was last down 0.8 per cent at $61.05 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 $1,233.50 an ounce.
“Concerns about Greece’s negotiation with its lenders should continue to support a safe-haven bid for gold,’’ said Victor Thianpiriya, an analyst with ANZ.
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