June 22, 2015 / 2:55 AM / 2 years ago

Stocks climb on hopes over Greek deal, gold falls

NEW YORK (Reuters) - A new offer by Greece on a reform package to avoid a default on its debts raised hopes that a tangible deal with international creditors was still possible, lifting world stock indexes and pushing down gold prices on Monday.

Traders work on the floor of the New York Stock Exchange June 22, 2015. REUTERS/Brendan McDermid

Gold prices fell more than 1 percent, while crude oil futures also eased.

Euro zone finance ministers left a meeting with Greek officials optimistic over Athens’ offer, with talk of more work ahead to achieve a potential deal this week.

The ministers agreed to reconvene before the week is over, after Greece thrashed out details with its international creditors the European Commission, the European Central Bank and the International Monetary Fund.

“Now you’re seeing the leaders of (euro zone) countries meeting to reach a deal and the hope that a deal is on the horizon is reflected in the rally today,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

The euro was nearly flat against the dollar EUR=EBS, while it was up against the yen and Swiss franc. The euro rose 0.79 percent to 140.42 yen EURJPY=EBS.

MSCI’s all-country stock index .MIWD00000PUS climbed 1.1 percent.

Greek stocks were 9 percent .ATG higher, while Greek bank shares surged 20.8 percent .FTATBNK. European shares .FTEU3 ended up 2.4 percent.

M&A BOOST

Wall Street got a boost from both the Greek talks and a surge in merger and acquisition activity.

The Dow Jones industrial average .DJI rose 93.79 points, or 0.52 percent, to 18,109.74, the S&P 500 .SPX gained 11.67 points, or 0.55 percent, to 2,121.66 and the Nasdaq Composite .IXIC added 27.85 points, or 0.54 percent, to 5,144.85.

U.S. Treasuries prices tumbled on optimism over a Greek deal and as stronger-than-expected U.S. existing home sales data supported expectations of a September Federal Reserve rate hike.

Benchmark 10-year prices were last down 27/32 to yield 2.36 percent, from a yield of 2.27 percent late Friday US10YT=RR.

The National Association of Realtors said on Monday existing home sales increased 5.1 percent to an annual rate of 5.35 million units, the highest in five and a half years.

The data was the latest indication that housing and overall economic activity were gathering steam in the second quarter.

COMMODITIES DROP

Athens is running out of cash to repay a 1.6 billion euro IMF loan due at the end of the month unless it secures new financing from international creditors.

Speculation is rife that, if no deal is reached on Monday, Greece would need to impose capital controls on Tuesday to avert a banking crisis as savers keep withdrawing funds from banks.

The ECB on Monday raised the ceiling on emergency liquidity Greek banks can draw from the country’s central bank for a third time in six days.

In commodities, gold fell as global equities jumped on the signs of progress in Greek talks, which curbed safe-haven demand for the metal.

Spot gold XAU= was down as much as 1.4 percent to a session low of $1,183.75 an ounce.

Crude oil futures fell for a second session on concerns U.S. demand for gasoline may fade after a strong stretch.

Brent crude futures LCOc1 were down 20 cents, or 0.3 percent, at $62.82 a barrel, while U.S. crude futures CLc1 fell 30 cents, or 0.5 percent, to $59.31.

Additional reporting by Daniel Bases and Sam Forgione in New York, Jamie McGeever in London, Tanya Agrawal in Bengaluru; Editing by Bernadette Baum

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