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By Bloomberg

European stocks rose and gains in bonds sent Italian and Portuguese yields to record lows as Greece received a four-month extension on its bailout. Oil fell, and the ruble weakened after Moody’s Investors Service became the second rating agency to downgrade Russia to junk.

The Stoxx Europe 600 Index climbed 0.4 percent at 10:05 a.m. in London. Standard & Poor’s 500 Index futures slipped 0.2 percent. Italy’s five-year note yield dropped as low as 0.601 percent and Portugal’s 10-year rate reached 2.118 percent, falling below its U.S. equivalent. The dollar strengthened before Federal Reserve Chair Janet Yellen addresses Congress this week. The ruble slid 2.8 percent in offshore trading, with local markets closed for a holiday. Oil declined 1.2 percent in New York.

The government in Athens has until the end of Monday to complete a list of policies in return for the continued funding after talks concluded late on Feb. 20. Moody’s joined S&P in ranking the Russia’s debt as junk, citing the conflict in Ukraine and plunging oil prices. Sales of existing U.S. homes probably slipped in January, economists said before a National Association of Realtors report.

“Markets have reacted positively in terms of risk sentiment and we’re seeing the periphery doing very well” because of the Greek deal, said Owen Callan, a fixed-income strategist at Cantor Fitzgerald LP in Dublin. “It takes away the big short-term event risk, even if a medium-term risk is still there.”

Greek Policies

Greek government bonds rose for a fourth day, with the three-year note yield dropping 193 basis points, or 1.93 percentage point, to 14.69 percent, reaching the lowest since Jan. 28. Spanish securities advanced with their counterparts among Europe’s higher-yielding government bonds, pushing the 10- year yield six basis points lower to 1.44 percent.

The Greek reform measures are still subject to validation by the International Monetary Fund, the European Central Bank and the European Commission, the institutions collectively known as the troika which Prime Minister Alexis Tsipras vowed not to recognize.

“Greece will still be an issue for the market for some time,” said Kevin Lilley, who helps manage 15 billion pounds ($23 billion) as head of European equities at Old Mutual Global Investors U.K. in London. “If we can get the agreement made in the next couple of days, which is necessary for this extension, then hopefully the market can pop that to one side for a few months and focus on the underlying economy, which is steadily improving.”

Europe Stocks

Health-care companies led the Stoxx 600 rally, while commodity producers fell. The U.K.’s FTSE 100 Index surpassed a record close in intraday trading before slipping 0.2 percent. The Greek market is closed for a holiday after the ASE Index fell 4.5 percent last week.

PostNL NV climbed 9.2 percent after the Dutch company reported 2014 revenue was 4.25 billion euros ($4.83 billion), exceeding the 4.02 billion euros that analysts had estimated. Lloyds Banking Group Plc gained 1.4 percent after the U.K. government sold a further 500 million pounds ($769 million) of shares, reducing its stake in the country’s largest mortgage lender before a general election.

HSBC Holdings Plc lost 5.5 percent after saying full-year profit fell more than analysts had projected as costs increased and Europe’s largest bank made provisions for fines and settlements. Ladbrokes Plc dropped 7 percent after the Sunday Times reported it is closing about 50 betting shops.

S&P 500 futures expiring in March were little changed after the index advanced 0.6 percent to a record last week.

Russia Downgrade

Russia’s $3 billion of 4.875 percent bonds due September 2023 fell for a third day, sending the yield 16 basis points higher to 6.57 percent. The cost of insuring the government’s debt rose, signaling a 30 percent chance of default within five years, according to data compiled by Bloomberg.

Moody’s cut Russia’s rating one step to Ba1, the highest non-investment level and in line with countries including Hungary and Portugal. Downgrades to junk from at least two rating companies may force money managers whose investment guidelines prohibit them from holding debt rated below investment grade to sell as much as $5.8 billion of Russian dollar and local bonds, according to a January report from JPMorgan Chase & Co.

Credit-default swaps on Russia’s government debt rose, signaling a 30 percent chance of default within five years, according to data compiled by Bloomberg.

Pro-Russia rebels attacked Ukrainian positions with artillery, mortars and automatic weapons, the Defense Ministry in Kiev said, as a bomb killed two people at a pro-Ukraine rally in the eastern city of Kharkiv.

Turkey Rates

Ukraine’s $2.6 billion of 9.25 percent bonds maturing in July 2017 fell for a seventh day, dropping 1.46 cents to 42.60 cents on the dollar.

Benchmark gauges in Poland, Hungary and the Czech Republic rose at 0.4 percent, while the Borsa Istanbul 100 Index fell 0.6 percent.

Turkey’s lira slid 1.1 percent against the dollar amid speculation the central bank will cut interest rates on Tuesday.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.4 percent as trading resumed following Lunar New Year holidays.

The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies fell 1.5 basis points to 52 basis points, the lowest level in more than seven years, according to data compiled by Bloomberg. Average yields on high-grade bonds in euros dropped to a record low of 0.92 percent, Bank of America Merrill Lynch index data show.

Haven Demand

The Swiss franc weakened with core government bonds on reduced demand for haven assets, depreciating 0.5 percent to 1.07328 per euro. The dollar strengthened 0.6 percent to $1.1318 per euro and the Bloomberg Dollar Spot Index advanced 0.4 percent.

The Treasury 10-year yield increased to 2.12 percent. Germany’s 10-year yield rose two basis points to 0.39 percent and equivalent-maturity U.K. gilt yields jumped five basis points to 1.82 percent.

The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies fell 1.5 basis points to 52 basis points, the lowest level in more than seven years, according to data compiled by Bloomberg. Average yields on high-grade bonds in euros dropped to a record low of 0.92 percent, Bank of America Merrill Lynch index data show.

West Texas Intermediate crude oil for April delivery traded 60 cents lower at $50.21 a barrel. Brent was down 0.4 percent at $59.96 a barrel in London.

Libya Pipelines

Oil fell as fields in eastern Libya resumed pumping to Hariga port after a pipeline was repaired, according to state- run National Oil Corp. Oman, the biggest Middle Eastern oil producer that’s not a member of OPEC, is boosting crude output to as much as possible with the global price rout over, said Salim Al Aufi, undersecretary of the oil and gas ministry.

U.S. natural gas futures rose 2.6 percent to the highest since Jan. 22 amid predictions for cold weather persisting through March. Chicago’s low temperature for Feb. 26 is forecast at 3 degrees Fahrenheit (-16 Celsius), or 22 degrees below the historical average, according to AccuWeather.

Gold for immediate delivery fell below $1,200 an ounce in London, after dropping for a fourth straight week through Friday, the longest such streak since September 2013. The net- long position in gold tumbled 18 percent to 110,164 futures and options contracts in the week ended Feb. 17, according to U.S. Commodity Futures Trading Commission data.