By Tanya Agrawal
REUTERS - Wall Street opened sharply higher on Monday after euro zone leaders reached an agreement with Greece to move forward with a third bailout loan for the country to avert bankruptcy.
Greece won conditional agreement to receive a possible $95 billion over three years, along with an assurance that euro zone finance ministers would start discussing ways to bridge a funding gap until a bailout - subject to parliamentary approvals - is finally ready.
That will only happen if Greek Prime Minister Alexis Tsipras can meet a tight timetable for enacting unpopular reforms of value added tax, pensions and quasi-automatic budget cuts.
"For the markets, it's clearly a positive that there is an agreement among the European member states and that there is an atmosphere of co-operation," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"Still, there is a bit of execution risk which may haunt us in terms of volatility."
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World markets rose, while the dollar index gained 0.51 percent to $96.50 against a basket of major currencies following news of the deal. Chinese stocks rose for a third straight session as data showed exports increased while imports slipped in June, a tentative sign global demand might be on the mend.
At 9:40 a.m. ET (1340 GMT) the Dow Jones industrial average was up 166.36 points, or 0.94 percent, at 17,926.77. The S&P 500 was up 16.43 points, or 0.79 percent, at 2,093.05 and the Nasdaq composite was up 43.74 points, or 0.88 percent, at 5,041.44.
All the 10 major S&P 500 sectors were higher. The consumer discretionary index's 1.07 percent rise led the gains.
Financial stocks were also higher with the index gaining 0.99 percent, following the Greek debt deal. Big banks such as JPMorgan, Bank of America, Citigroup were all up 1 percent.
Oil prices tumbled as Iran and six world powers closed in on a nuclear deal that would end sanctions on the Islamic Republic and let more Iranian oil on to world markets.
However, the oil price slide boosted U.S. airline stocks. American Airlines, United Continental, JetBlue, Alaska Air were all up between 1.5 to up 2 percent.
Apple shares were up 1.1 percent at $124.64 after Socgen upgraded the company's stock to "buy" from "hold", saying it expected a successful launch of the new iPhone 6S handset in September.
Ascena Retail Group slumped 13.9 percent to $14.10 after the retail chain cut its full-year profit forecast.
Remy International soared 42 percent to $29.15 after auto parts maker BorgWarner said it would buy the company for about $1.2 billion in cash, including debt. BorgWarner's shares rose 0.5 percent to $53.90.
The U.S. Treasury Department is scheduled to issue its June budget report at 2 p.m. ET (1800 GMT). The department is expected to post a budget surplus of $51.0 billion, compared with a $82.4 billion deficit reported in May.
Advancing issues outnumbered decliners on the NYSE by 2,095 to 615. On the Nasdaq, 1,735 issues rose and 583 fell.
The S&P 500 index showed 29 new 52-week highs and four new lows, while the Nasdaq recorded 76 new highs and 18 new lows.
(Additional reporting by Atul Prakash and Alistair Smout; Editing by Savio D'Souza)