European shares ended flat today, with banks gaining after a rescue package for Greece helped soothed some nerves over Athens' debt problems.
The euro rose to its highest level against the dollar in nearly a month, making dollar-denominated commodities cheaper for users of that currency, as investors reacted positively to Greece's debt rescue plan.
Gold hit four-month highs, while crops such as sugar and cocoa - known as soft commodities - rose as much as 2 per cent each.
The FTSEurofirst 300 index of top European shares closed flat at 1,101.44 points after rising to 1,105.08 – its highest in more than 18 months.
The index closed 1.3 percent higher on Friday, notching up its sixth straight week of gains.
The European benchmark is up about 5 per cent this year and has surged 71 per cent from its record low in March 2009.
Banks were in favour after euro zone finance ministers agreed on Sunday to a €30 billion emergency aid package for Greece if it requests help, with the International Monetary Fund expected to supply a further €15 billion in the first year.
Barclays, HSBC, Societe Generale, BNP Paribas and Deutsche Bank rose 0.6 to 2.3 per cent, while Greek banks added 5.7 per cent.
"In the short term there are chances of a certain easing of fears. However, in the medium term, any real improvement in the tensions within the European Monetary Union needs to see the underlying causes being addressed," said Tammo Greetfeld, equity strategist at UniCredit in Munich.
The aid mechanism allows Greece to borrow from euro zone peers and the IMF at well below market rates, but questions remained over whether Greece would use the bailout fund, how it would be activated, and how Athens would cope with its €300 billion debt mountain in the longer term.
"No aid package can address the underlying issues. It can buy time and that is what this aid package does. The decision is no green light for medium term equity investments," Mr Greetfeld said.
Among individual movers, UBS rose 3.1 per cent after it delivered its highest pretax profit since the start of the credit crisis began.
Home Retail jumped 4.9 percent after a Sunday newspaper said the British company might be a bid target for Wal Mart-owned grocer Asda, which declined to comment.
On the downside, Essilor International fell 2.5 per cent, pressured by a recommendation downgrade by BNP Paribas to "neutral" from "outperform".
Reuters