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MORNING BELL: Euro on gains - firm sterling - gold rallies

The euro held on to gains on Tuesday after surging against the dollar as the initial shock of seeing Greece heading for a debt default eased slightly, but tensions remained high as the market awaited further developments in the deepening crisis.

The common currency stood at $1.1216 after surging from a 4-week low of $1.0955 struck overnight. The euro hit the low in a reaction to developments over the weekend that saw Greece's creditors lose patience and freeze a credit lifeline, after Athens opted for a national referendum on a bailout that would bring them much-needed cash while the country entered the 2nd day of its banking system shutdown. The country is on its way to default on €1.6B of loans from the IMF, due on Tuesday, and faces the possibility of exiting the Euro zone.

Equities around the globe tumbled overnight, spooked by fears of Greece becoming the first country to exit the euro zone and the negative impact that could bring on the global financial system.

With a default now looking inevitable, focus fells on how popular opinion takes shape in Greece before the country heads for the polls on Sunday to vote on the bailout. 

The British pound hit a 7.5-year high against the euro on Monday as investors veered towards currencies perceived to be a safe haven, after Greece imposed capital controls. The pound fell from those highs in afternoon trade but was still firmer on the day.

In the energies and commodities markets, crude oil prices held a 3-week low on Tuesday, following the rapid developments in Greece and after talks on Iran's disputed nuclear program look set to be extended. Gold retained gains from a 2-day rally.

New Zealand business confidence turned negative and slumped to its 4-years low, as a slowing economy weighed on sentiment, while inflation expectations picked up marginally, an ANZ Bank survey showed on Tuesday. The survey's headline measure showed a net 2.3 percent of respondents expected the economy to worsen over the year ahead.







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