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(Bloomberg) — U.S. stocks climbed with global equities, and bonds from Spain to Italy surged amid optimism a deal between Greece and its creditors will soon be reached. Treasuries slid, while the dollar strengthened.

The Standard & Poor’s 500 Index rose 0.6 percent by 4 p.m. in New York, ending at a three-week high and within 0.4 percent of a record. The Stoxx Europe 600 Index jumped 2.3 percent, the most since May 8. Yields on 10-year Treasury notes gained 12 basis points to 2.37 percent, while Greek bond rates sank 150 basis points. The nation’s equity index surged 9 percent. The Bloomberg Dollar Spot Index gained 0.2 percent. Gold slumped.

European Commission President Jean-Claude Juncker said after an emergency summit in Brussels that he was convinced a final agreement will be reached with Greece this week. German Chancellor Angela Merkel reiterated she wants Greece to stay in the euro area, but the country still has a lot of work to do. Meanwhile in the U.S., corporate merger activity also helped boost U.S. stocks amid a surge in existing home sales data.

“I’m pretty optimistic about this week with the recent developments in Greece,” said Paul Zemsky, head of multi-asset strategies in Atlanta at Voya Investment Management LLC, which oversees $218 billion. “There were also better existing home sales data, showing the housing market is healthy. Last week we got better news from Fed.”

More Work

Proposals made by Greece ahead of the summit were a major step, Juncker said, adding that debt relief for the country wasn’t discussed at the meeting. Merkel said Greece still has a lot of work to do and that further talks need to be carried out with more intensity. Leaders at the summit didn’t talk about “extension scenarios” or a possible third program for the nation.

The euro was little changed at $1.1338 in early Tuesday trading, after slipping 0.1 percent on Monday.

The S&P 500 rose as much as 0.9 percent to within a point of its May 21 record in Monday trading, before paring gains. The index is coming off its best week since April, climbing 0.8 percent after Federal Reserve Chair Janet Yellen signaled the central bank will take a gradual approach to raising U.S. interest rates.

Data Monday showed previously owned U.S. homes sold at the fastest pace since November 2009 in May, adding to evidence the economy is strong enough to withstand the first rate increase since 2006. Three rounds of Fed bond purchases and near-zero interest rates helped propel the S&P 500 higher by more than 200 percent during the six-year bull market.

M&A Boost

Deal activity boosted benchmark indexes Monday. Williams Cos. surged 26 percent after rejecting a $48 billion stock-based takeover offer from pipeline magnate Kelcy Warren. Cigna Corp. jumped 4.7 percent after rejecting Anthem Inc.’s $47 billion takeover bid.

In the currencies market, the dollar climbed 0.5 percent to 123.37 yen, with the Bloomberg dollar gauge, which tracks the greenback against 10 major peers, rising a second day. Treasuries due in a decade plunged the most since May amid the progress in Greece.

“The risk-on mood is driving markets today, not only in bonds but also in equities,” said Patrick Jacq, a senior fixed- income strategist at BNP Paribas SA in Paris. “Clearly the market is playing a positive outcome. But this doesn’t mean we’re going to see an agreement. As long as we don’t have an official agreement between Greece and its creditors the situation remains vulnerable.”

Greek Rebound

Futures on Japan’s Nikkei 225 Stock Average paced gains in the U.,S. and Europe, rising 0.4 percent with contracts on Australia’s S&P/ASX 200 Index. Futures on the Kospi index in Seoul added 0.3 percent, and contracts on the Hang Seng and Hang Seng China Enterprises indexes in Hong Kong advanced at least 0.2 percent.

Banks led Greece’s ASE Index to its steepest gain since February, the biggest surge among western-European markets. The country needs to make repayments to creditors including the International Monetary Fund by June 30.

Higher-yielding European debt rallied, with Italian bonds climbing the most in more than a year while, Spain’s 10-year rates fell 16 basis points, or 0.16 percentage point, to 2.11 percent. German 10-year bunds slipped, sending yields up by 13 basis points to 0.88 percent.

Yield Outlook

If an agreement is reached, German yields “could push above 90 basis points and we can see further spread compression,” BNP Paribas’ Jacq said. “The market’s moving in this direction but not fully pricing in an agreement.”

The MSCI Emerging Markets Index rose 1.3 percent, the most in nine weeks, with equities in Poland, India and Taiwan advancing at least 1.3 percent. Markets in China were closed Monday for a holiday.
Gold capped its biggest decline in almost four weeks on speculation a Greek deal would reduce demand for the precious metal as a haven investment. Futures for August delivery fell 1.5 percent to settle at $1,184.10 an ounce on the Comex in New York.

West Texas Intermediate crude added 0.1 percent to settle at $59.68 a barrel in New York, erasing earlier losses on speculation U.S. inventories fell for an eighth week. Brent climbed 0.5 percent to end at $63.3 per barrel.

–With assistance from Cecile Vannucci, David Goodman, Neil Denslow, James Herron, Paul Dobson and Stephen Kirkland in London.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net; Emma O’Brien in Wellington at eobrien6@bloomberg.net To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net Jeremy Herron