Euro zone ministers have given Greece till July 3 to approve further spending cuts and tax increases in exchange for another €12 billion in emergency funding.

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European shares fell on Monday on growing concerns about sovereign debt concerns in the euro zone. Stocks were pressured after the much anticipated bail-out package for Greece did not eventuate. Banks stocks fell with the STOXX Europe banking index down 0.9pct. The FTSEurofirst index fell by 0.5pct with the German Dax lower by 0.1pct and the UK FTSE down 0.4pct.

US sharemarkets recorded healthy gains on Monday, however volumes were light. The S&P 500 recovered from early losses after nearing a key support level. Healthcare and retail stocks led the gains. The CBOE volatility index fell 8.5pct. The Dow Jones rose by 76pts or 0.6pct with the S&P 500 up 0.5pct and the Nasdaq gained 13pts or 0.5pct.

US treasuries were mixed on Monday as fears over Greece´s ongoing debt crisis was offset by the rise in US equities. Traders also waited on the upcoming FOMC meeting which will include the Federal Reserve´s latest US growth forecasts. US 2yr yields were lower by 1pt to 0.375pct and US 10yr yields rose by 1pt to 2.956pct.

The Euro recovered against the US dollar after early weakness following news that European finance ministers had given Greece an ultimatum to commit to further austerity measures. The Euro rose from lows near US$1.4190 to US$1.4325, before ending US trade near US$1.4300. The Aussie dollar rose from lows near US104.95c to US105.90c before ending US trade near US105.70c. And the Japanese yen weakened from highs near 80.00 yen per US dollar to lows around JPY80.35, ending US trade near JPY80.30.

US crude oil prices recorded modest gains on Monday after hitting four-month lows in the prior session. The concerns over Greek debt and the potential impact on European growth prospects resulted in the premium between London Brent and West Texas Intermediate narrowing to below $18, after blowing out to a record $23 last week. The Nymex crude oil contract rose by US25c or 0.3pct US$93.26 a barrel and London Brent crude fell by US$1.52 to US$111.69 a barrel.

Base metal prices were mostly weaker on the London Metal Exchange on Monday. Copper fell by 1pct as investors risk-aversion was heightened following the delay in financial aid to Greece. And the gold price continued to gain from safe-haven investment flows. Comex gold rose by US$2.90 an ounce to US$1,542.00.
Ahead:

In Australia, the Reserve Bank Board minutes is released. In the US, existing home sales data is expected.

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