Hopes that the crisis over Greek sovereign debt may have been contained lifted the euro on Monday and allowed European stocks to gain on the back of higher metal prices.
Greece remained in focus with bond traders seeking to assess whether Athens can launch a syndicated bond sale, which markets are expecting as early as this week.
The European Union, European Central Bank and International Monetary Fund moved to create a safety net for Greece last week, essentially seeking to persuade markets that the country's bonds and those of other peripheral economies would not default.
The euro, which has been battered by the crisis, rose 0.7 percent against the dollar to $1.3495. It also gained broadly against the Swiss franc, Swedish crown, Japanese yen and British pound. "The EU agreement on Greece instilled some confidence and we are seeing a degree of a relief rally although a modest one," said Lee Hardman, economist at Bank of Tokyo-Mitsubishi UFJ.
"Greek yields are still elevated, and Greece is not out of the woods yet by any stretch of the imagination."
Some of that caution could be seen on euro zone government bonds markets, where paper was steady to lower with focus on the upcoming Greek bond sale.
"We know they need to do 16 billion euros in the next couple of months and that will probably take the steam out of the peripheral recovery until it's out of the way," said a trader.
The yield on 10-year Bunds was up about 1 basis point at 3.170 percent. Greece yields were up five basis points at 6.228 percent.
STOCKS CLIMB
The removal of immediate worries about Greece allowed European stocks to focus elsewhere.
The pan-European FTSEurofirst 300 index of top shares was up 0.5 percent boosted by mining stocks, which got support from stronger metal prices.
Copper hit its highest since early January on a forecast rise in U.S. payrolls, falling stocks and the fading uncertainty over euro zone debt defaults.
The European stock index rose nearly 26 percent in 2009 and is up more than 3 percent so far this quarter.
Gains in Europe and among emerging markets lifted MSCI's all-country world index 0.4 percent.
Earlier, Japan's Nikkei average dipped 0.1 percent on Monday, backing off an 18-month high hit last week.
