YAHOO [BRIEFING.COM]: An agreement by ministers of the European Union to provide financial aid to Greece drove down the dollar and helped stocks hit new 52-week highs, but overall gains remained modest as market participants exercised caution ahead of earnings season.

During the weekend European Union ministers agreed to offer to Greece 30 billion euros at below market rates in order to help the country get its financial house in order. Though the offer brings to an end speculation over the type and size of aid that would be offered, it does not explicitly address continued concern about the health of Portugal, Spain, and Italy -- the rest of the PIGS contingent.

Still, with the most immediate of concerns regarding systemic risk in the EU addressed the euro was able to stage a strong gain against the dollar. Although strength in the euro helped send a basket of foreign currencies to a 0.4% gain against the greenback, the buck managed to pare its losses as the initial response to the headline faded -- overnight the Dollar Index had been down as much as 1.0%.

Nonetheless, news of aid for Greece and a dip by the dollar helped the broader equity market continue its upward trend, such that it even set a slightly improved 52-week high as it advanced for its sixth time in seven sessions.

Volatility fell as a result the persistently positive tone in the stock market. In fact, the Volatility Index, often euphemistically dubbed the Fear Index, closed 3.9% lower. It had been down as much as 5.6% to a new 30-month low during the session.

Despite the dollar's downturn and a positive tone in the broader market, materials stocks lagged for virtually the entire session. The sector settled with a 0.5% loss, which may have been worse if not for leadership by Alcoa (AA 14.57, +0.18). The Dow component came into focus ahead of its latest quarterly results, which mark the unofficial start to earnings season. Market participants look to the company for a cue regarding whether profits are driven by demand or continued cost cuts.

Meanwhile, commodities finished largely unchanged for the session. Modest weakness in precious metals and energy was offset by strength in industrial metals and soft commodities, such as cocoa, coffee, sugar and orange juice.

Natural gas was the primary laggard in the energy space this session. June natural gas closed 1.5% lower at $4.01 per MMBtu.

Crude oil straddled the $85 level for most of the session. It sold off heading into the close to finish 0.7% lower at $84.34 per barrel.

Gold and silver futures both finished marginally higher after a quiet session. June gold closed up a fraction at $1162.20 per ounce and May silver closed up 0.3% at $18.41 per ounce. Both metals sold off ~1% after the close of the pit trade, however.

Amid uncertainty regarding the health of corporate profits, market participants kept a cap on gains. Technical resistance also played a hand as the S&P 500 bumps up against 1200. Those factors also weighed on share volume as many traders opted to sit on the sidelines.

Deal making was in full speed, however. Specifically, Haliburton (HAL 31.50, -0.07) will purchase Boots & Coots (WEL 2.95, +0.60), Cerberus will take private Dyncorp International (DCP 17.41, +5.41), and Reliant Energy (RRI 4.53, +0.58) and Mirant (MIR 12.68, +1.95) will engage in an all stock merger. Meanwhile, California Pizza Kitchen (CPKI 20.95, +0.21) announced that it is seeking strategic alternatives that may include a sale or merger.

Advancing Sectors: Financials (+0.5%), Utilities (+0.4%), Tech (+0.3%), Industrials (+0.3%), Energy (+0.3%), Consumer Staples (+0.1%)
Declining Sectors: Materials (-0.5%), Telecom (-0.2%), Health Care (-0.2%)
Unchanged: Consumer Discretionary DJ30 +8.62 NASDAQ +3.82 NQ100 +0.1% R2K +0.3% SP400 +0.1% SP500 +2.11 NASDAQ Adv/Vol/Dec 1473/2.06 bln/1211 NYSE Adv/Vol/Dec 1737/973 mln/1304