Greek money tap re-opens

The week began on a positive note for Greece, despite a warning by Standard & Poor's, after European officials approved additional funding for the debt-challenged country.

European finance ministers approved an €8.7 billion-euro - US$12.6 billion - payout to Greece by mid-July. They also said they would aim to conclude talks with banks on maintaining their Greek debt holdings within weeks.

In Europe, the benchmark Stoxx 600 ended the day up 0.2 per cent, while oil and gold prices rose, too.

"We think the pricing of risk within the European stock market is at odds with current fundamentals," Ian Scott, a global equity strategist at Nomura Holdings in London, wrote in a report, according to Reuters.

"With the reduction in sovereign risks following the pivotal votes recently in Greece and the deal under discussion to roll over Greek bank debt, embedded risk premiums ought to come down."

Not so fast says ratings agency S&P. On Monday, the ratings agency said Greece would likely be in default if it agreed to a debt rollover plan pushed by French banks.

"It is our view that each of the two financing options described in the (French banks') proposal would likely amount to a default under our criteria," S&P said.

The euro fell from around US$1.4550 to a session low around US$1.4510 after the S&P comment, according to Reuters.

"The threat by S&P to put Greece in selective default in case of a debt rollover seems to be the proverbial 'fly in the soup' for risk appetite as the week opens," Greg Venizelos, a credit strategist at BNP Paribas in London, wrote in a note, according to Bloomberg. "Overall however, we are in a better place risk-wise than this time last week."

Crude for August delivery on the New York Mercantile Exchange was at US$95 at the 1.15pm New York time close of electronic trading on Globex.

Gold for August delivery advanced 0.9 per cent to US$1,495.60 an ounce by 10.13am London time on the Comex in New York today.

Most US markets were closed for Independence Day. Trading will resume tomorrow with investors looking ahead to the ADP report on Wednesday and the June payrolls report on Friday.

Meanwhile, Spain may find cautiously solid demand for its debt as the country's Treasury is set to tap bond markets on Thursday, hoping to raise between 2 billion and 3 billion euros in 3-year and 5-year bonds.

"It's not so panicky in terms of market sentiment after the Greece tranche was finalised so it should go pretty well for Spain on this shorter-dated paper, even if we are not expecting appetite to be overwhelming," Orlando Green, strategist at Credit Agricole, told Reuters.

Meanwhile, concern that easing global growth will hurt demand for metals, energy and grains prompted funds to reduce bullish bets on commodity prices to the lowest level in almost a year, according to Bloomberg.

Speculators cut their net-long positions in 18 US commodities by 15 per cent to 958,309 futures and options contracts in the week ended June 28, government data compiled by Bloomberg show.

That's the lowest since the week ended July 13 last year. Declines were led by a 67 per cent drop in holdings of soybean meal. Investors trimmed bets on silver by 26 per cent, the most since May 2010.