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GLOBAL MARKETS-Oil slips, euro wavers as Greek aid delayed

Published 06/20/2011, 11:35 AM
Updated 06/20/2011, 11:40 AM

* Euro zone ministers tell Greece not yet on 12 bln euros

* Safe-havens rise, risky assets fall on euro zone anxiety

* Investors grapple with how much risk Greek crisis poses (Adds fresh pricings)

By Herbert Lash

NEW YORK, June 20 (Reuters) - Oil slid and the euro wavered on Monday as risk aversion rose after European finance ministers postponed doling out emergency loans to Greece until the debt-strapped country approves new austerity measures.

The euro zone ministers meeting in Luxembourg gave Greece two weeks to approve stricter austerity measures in return for another 12 billion euros ($17 billion) in emergency loans, piling pressure on Athens to get its ragged finances in order. [ID:nLDE75I0FM]

The U.S. dollar was up slightly against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.02 percent, while the euro

But Wall Street moved higher, leading global stock indexes to trade near break-even, and bond prices erased early gains as investors grappled with whether Greece's fiscal crisis poses systemic risks and the state of a a flagging U.S economy.

"The sense is that Greece is going to get their money -- there is going to be a little bit of a fight, but the sense is the European Union is not going to let Greece default," said Ken Polcari, managing director at ICAP Equities in New York. "They are not going to let them go under, so therefore that is holding the market."

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Benchmark 10-year U.S. Treasury notes

"Treasury bulls may in fact have gotten a bit over excited in the early trade," said Gennadiy Goldberg, fixed income analyst at 4Cast Ltd. in New York.

The 10-year has strong technical resistance at 2.88 percent, the lowest yield since the beginning of December and a level the notes tested last week.

A further drop in U.S. bond yields may depend on whether investors fear a higher risk of contagion from the troubled euro zone, or see much weaker economic data.

"The market is having difficulty rallying without bad news from Europe or bad news on the side of the U.S. economy," said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York.

U.S. stocks also came close to a key technical level as the Standard & Poor's 500 Index dipped toward 1,259, its 200-day moving average, which encouraged buyers. A drop below that level would be the first time since September 2010.

"From a technical point of view, the 200-day moving average is where the market gains support," said Jason Ware, senior equity analyst at Albion Financial Group in Salt Lake City.

The Dow Jones industrial average <.DJI> was up 48.63 points, or 0.41 percent, at 12,052.99. The Standard & Poor's 500 Index <.SPX> was up 3.20 points, or 0.25 percent, at 1,274.70. The Nasdaq Composite Index <.IXIC> was up 2.41 points, or 0.09 percent, at 2,618.89.

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World stocks measured by the MSCI All-Country World Index <.MIWD00000PUS> fell 0.2 percent after a three-week decline.

U.S. light sweet crude oil fell 40 cents, or 0.43 percent, to $92.61 a barrel.

Brent crude fell by $1.23 a barrel to $111.98 a barrel.

Commodity markets remained fixed on the European debt crisis, led by whether Greece will win more aid.

"An expected short-term agreement will likely enable markets to breathe a little easier and allow commodity complexes to stage a respectable bounce on account of a stronger euro," MF Global analysts said in a note. "However, any 'solution' for Greece will be a temporary fix at best, as this issue is far too difficult to be wrapped up in a few weeks."

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