By Greg Peel

European stock markets continued the upward push last night, responding to Friday's strength on Wall Street and the agreement by EU officials to rubber stamp the release of the E12bn tranche of funds for Greece on the weekend. With New York closed trading was light, but the London and German stock markets added around 0.4%.

The euro had also pushed higher in the session until ratings agency Standard & Poor's decided to spoil the party. Last week first French and then German banks offered to rollover their holdings of Greek sovereign debt into longer dated maturities in a move intended to avoid default. Everyone was happy, so S&P thought it better get in and throw its weight around.

Given such rollovers would be considered a response to a "distressed" situation, S&P warned the move would be deemed equivalent to a default. The ECB cannot hold sovereign debt as collateral if it is deemed to be in default. The S&P nevertheless noted that the banks' proposal was only one of many being considered.

In the meantime, European officials questioned the ratings agencies on their acquisition of information, which harks back to the downgrade of Italian banks early last week.

The euro slipped back on the default risk news although the US dollar index is slightly lower at 74.28. Gold responded with a US$9.80 gain to US$1496.30/oz. The Aussie has lost 0.4% to US$1.0730 following yesterday's weak retail sales and building approvals data, which cement the expectation there will be no rate rise from the RBA today.

Base metals in London were all positive on moves under 1% except zinc, which jumped 2% in thin trade. Brent crude fell US21c to US$111.56/bbl.

The SPI Overnight gained 18 points or 0.4%.