Greek deal: Why did the euro just fall against the dollar?

09.00 (London Time): The Footsie pushed higher in early trade buoyed by news eurozone leaders have reached a tentative agreement on a new bailout deal for Greece as the country teeters on the brink of financial collapse following all-night talks in Brussels.

After an hour of trading, the FTSE 100 index was up 47.2 points, or 0.7 per cent at 6,720.5, albeit slipping back from bigger opening gains but still extending Friday’s 91.75 point gain and a 90 point advance recorded on Thursday on hopes that a deal could be done after Greece had submitted new reform proposals.

European markets were higher, with the Dax 30 index in Frankfurt adding 1.2 per cent and CAC 40 index in Paris up 1.7 per cent, although that was a retreat from a 3 per cent opening jump by both as investors sought further details on the Greek deal.

So far, European Council president Donald Tusk has only said the agreement would allow financial support to Athens to continue.

‘There are strict conditions to be met. Nevertheless, the decision gives Greece the chance to get back on track with the support of European partners,’ he added.

‘It also avoids the social, economic and political consequences that a negative outcome would have brought.’

The head of the European Commission, Jean-Claude Juncker, said the deal meant that Athens will not be forced out of the single currency.

On currency markets, the euro jumped to $1.1150 against the US dollar, and to $1.3940 versus the pound.

Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor, said: ‘Negotiators were cutting it fine in their desire to reach an agreement with Greece before European equity markets opened, but a deal has been made, which has sent equity markets higher.

‘This deal acknowledges the difficult financial situation Greece is currently in and discussions to provide “bridge financing”, in order to recapitalise Greek banks, will hopefully provide relief for ordinary Greek people who are increasingly struggling to subsist with the current capital controls.

‘However, whilst the deal may have been agreed by Europe, Greece must demonstrate good faith and trust by initiating reforms, not just talking about them.

‘Tsipras has until Wednesday to deliver new measures in parliament, which will not be easy, but will hopefully be achieved so that investors can finally put a line under the Greek issue, which has been a millstone round the necks of European equity markets.’

Asian markets were strong overnight on hopes for a Greek deal and as Chinese stock markets rallied again following a recent sell-off, helped by news the country’s trade figures were slightly better than expected.

There is little else around for direction today, with only a Bank of England credit conditions survey due for release on the data front – although the latest UK inflation and unemployment reports are due tomorrow and Wednesday – and not much corporate news around, aide from a big takeover deal for mid cap chemicals firm Alent.

Stocks in focus in London include:

ALENT – Shares surge 45 per cent, or 153.4p to 491.1p as US chemicals maker Platform Specialty Products Corp launches recommended 503p a share cash offer for the UK chemicals mid cap, valuing the firm at about £1.35billion.

IAG – The owner of British Airways and Iberia tops the FTSE 100 leader board, up 2.5 per cent or 13p at 544 as Swiss broker UBS upgrades its rating for the stock to buy from neutral. Shares gained on Friday after news Ryanair had agreed to sell IAG its stake in takeover target Aer Lingus.

ROYAL BANK OF SCOTLAND – The taxpayer-owned lender is winding down its Greek operation and putting its $5billion shipping loans portfolio up for sale as the group scales back non-core activities, sources familiar with the plans have told Reuters. RBS shares add 4.0p at 349.1p with financial stocks boosted by news of a Greek debt deal.

BARCLAYS- The bank, which last week fired its chief executive Anthony Jenkins Barclays is considering an acquisition to help split off its retail banking arm, the Financial Times reported. Shares gain 4.2p at 272.2p.

UNILEVER – The consumer goods group is stepping up its search for a news chairman, Sky News reported. Shares gain 25p at 2,906p.

BP – The oil major, which agreed to pay $18.7billion to settle the Gulf of Mexico oil spill issue, is now facing threat from tens of thousands of companies who have filed claims seeking compensation, the Financial Times reported. Shares up 1.3p at 428.3p.

BHP BILLITON – Shares in the global miner lead a depressed sector lower, off 11.5p at 1,216p, failing to bolstered by a rally by Chinese stock markets after better than forecast trade data from the world’s biggest consumer of commodities. China’s exports rose 2.8 per cent in June, while imports fell 6.1 per cent.

ARM HOLDINGS – Shares in the chip designer lose 6p at 1,009p as broker JPMorgan Cazenove cuts its rating for the stock to underweight from neutral.

STAGECOACH – Shares in the mid cap transport operator shed 6.9p at 387.9p as JPMorgan Cazenove downgrades its stance to neutral from overweight.

TETHYS PETROLEUM – Shares in the small cap oil producer jump 25 per cent, or 2p to 9.75p after Nostrum Oil & Gas reveals it has made a further approach regarding a possible offer for the entire company. Nostrum Oil shares shed 4.5p at 588.5p.

08.00: The Footsie is expected to open up around 45 points higher this morning on chatter that a deal over Greece has been reached by eurozone leaders in Brussels.

Belgium’s prime minister Charles Michel has tweeted that a deal has been signed, although no official confirmation has taken place.  

The FTSE 100 index closed up 91.75 points at 6673.38 on Friday, ahead of a weekend of summits after Greek Prime minister Alexis Tsipras made a number of major concessions to his country's creditors. 

Creditors have demanded Greece pass a number of reforms into law by Wednesday, including streamlining VAT, broadening the tax base and a pensions overhaul.

But Tsipras faces a divided Syriza government back in Athens, who are against more tight austerity measures. 

Naeem Aslam, at Avatrade, said: 'European markets are trading higher on a positive note this morning on the back of hopes that a deal will be finally announced this morning between Greece and its creditors. 

'There have been many moments over the weekend, when it appeared that once again the communications between two parties could break, however, both sides have shown their sensible behavior and have worked through their conflicts.'

In more good news, China shares rebounded again overnight after the country recorded a rise in exports of 2.8 per cent in June, while imports slipped 6.1 per cent. 

Both number topped expectations in a tentative sign the country's economy and global demand might be on the mend.

Michael van Dulken, at Accendo Markets, said: 'China’s equity market bounce is offering some solace, buoying equities in Asia helped by better than expected China trade data as exports rebounded and imports contraction slowed.'

UK company news scheduled today includes:

Interims: SThree

Finals: Conviviality Retail, Collagen Solutions, Cosalt

Trading updates: Genel Energy, Telit Communications, Savannah Petroleum  

Text of the Euro Summit statement on Greece (NY Times)

A copy of what European Union officials said were final conclusions from the summit of 19 eurozone leaders that began on Sunday afternoon and ended on Monday morning.