Euro steadies, EU leaders talk Greek compromise

SYDNEY (Reuters) - The euro steadied on Monday after an early dip while top-rated bonds stayed in demand as the Greek debt crisis seemed set to rumble on for yet another week, though the market mood was helped by improving trade numbers from China.

The moves were mild amid news Euro zone leaders were to reconvene early on Monday to discuss a compromise proposal on a third bailout for Greece.

Japan's Nikkei <.N225> managed to bounce 1.1 percent, while MSCI's index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> inched up 0.2 percent.

The single currency quickly steadied at $1.1130 after an initial 0.5 percent drop to $1.1090 . Likewise, the euro pared its losses against the yen to stand at 136.41 after an early drop to 135.40. The U.S. dollar barely budged against a basket of currencies at 95.974 <.DXY>.

Demand for sovereign debt lifted U.S. 10-year Treasury futures <0#TY:> 8 ticks, while the S&P E-MINI U.S. stock contract lost 0.3 percent .

Aiding the euro were rumours the European Central Bank had agreed to delay a Greek repayment of 3.5 billion euros that had been due on July 20.

Euro zone leaders had told the cash-strapped Greek government it must enact key reforms this week to restore trust before they will open talks on a financial rescue.

Sweeping measures including tax and pension reforms must be enacted by Wednesday night and the entire package endorsed by the Greek parliament before talks could start.

Asian investors were also anxiously watching to see if China's stock markets could sustain last week's late rally after a barrage of government support measures.

The CSI300 index <.CSI300> of the largest listed companies in Shanghai and Shenzhen was up 0.3 percent on Monday, having ended last week with a gain of 5.7 percent.

China reported exports rose 2.1 percent in June from a year earlier in yuan terms, while imports were down 6.7 percent in a tentative sign global demand might be on the mend. The dollar-denominated figures were not yet made available.

The Asian giant reports domestic product data on Wednesday and forecasts are that annual growth slowed to 6.9 percent last quarter, making it harder to meet Beijing's target of 7 percent for the whole year.

As if Wednesday were not already busy enough, Federal Reserve Chair Janet Yellen is also due to appear before the House Financial Services Committee.

Last week, Yellen said she still expected a rise in interest rates at some point this year, but repeated concerns that U.S. labour markets were weaker than desired.

In commodity markets, gold failed to get much of a safety bid, easing over a dollar to $1,161.80 an ounce .

Oil prices were under pressure as Iran and six world powers neared an historic nuclear deal that would bring sanctions relief and thus more crude onto the market.

Brent crude was off 99 cents to $57.74 a barrel and U.S. crude eased 89 cents to $51.85.

(Editing Shri Navaratnam)

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