tentative go-ahead for the disbursement of 44 billion euros in emergency loans to Greece at a meeting later on Tuesday. The money will only be paid on Dec. 5 if Greece meets all remaining conditions.
The ministers will also discuss how to reduce Greek debt and provide two extra years of external financing to help the country achieve its fiscal targets.
TAIL RISKS REMAIN
European equities rebounded from multi-month lows on Monday for their biggest daily gain in 10 weeks on signs of progress in U.S. talks to avoid a budget crisis. An unexpected rise in U.S. existing home sales for October also boosted sentiment. Ratings agency Fitch on Monday warned that failure to reach a deal to resolve the $600 billion fiscal cliff of spending cuts and tax increases could trigger a recession and push the U.S. jobless rate above 10 percent.
Fitch said, however, it did not expect Congress to allow the fiscal cliff to take place given the far-reaching effects. Fitch's view largely reflected recent market optimism. But Richard Franulovich, senior currency strategist at Westpac Securities in New York, said in a note that the positive conciliatory rhetoric over the fiscal cliff could easily come unstuck, while anything that is produced at the euro zone finance ministers' meeting is likely to be piecemeal.
Given our read of the fiscal cliff and Greek risks we remain comfortable fading strength in risk assets, he said.
The CBOE Volatility index, a gauge for expected volatility in the S&P 500, hit a one- month low on Monday, reflecting receding risk aversion.
The dollar retreated from the two-month high of 81.455 hit on Friday against a basket of key currencies, and helped buoy dollar-denominated commodities. U.S. crude futures eased 0.4 percent to $88.94 a barrel after rising over $2 the previous day on supply concerns.
Israel bombed dozens more targets in the Gaza Strip on Monday. It said that, while it was prepared to step up its offensive by sending in troops, it preferred a diplomatic solution that would end Palestinian rocket fire. Egypt said a deal for a truce could be close.