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SYDNEY, Nov 26 AAP

November 26 2012, 07:30AM

The Australian dollar is half a US cent higher following rallies on global stock markets at the end of last week.

At 0700 AEDT on Monday, the currency was trading at 104.56 US cents, up from 103.98 cents on Friday afternoon.

It reached a two-month high of 104.72 US cents on Saturday morning (Australian time) after equity markets rallied in the US and Europe.

US markets surged on the first day of trading after the Thanksgiving holiday, with the Dow Jones Industrial Average rising 1.35 per cent, the S&P 500 climbing 1.30 per cent and the Nasdaq finishing 1.38 per cent higher.

Meanwhile, in Europe, Frankfurt's DAX 30 lifted 0.89 per cent, while London's FTSE 100 rose 0.49 per cent.

HiFX senior trader Stuart Ive said the main driver for the Australian dollar early in the week would be ongoing negotiations between euro zone finance ministers concerning a possible write-down of Greece's debt.

"It will be all eyes to Europe once again, unfortunately," he said.

He said the currency would likely remain stuck in a range of between 104.20 US cents and 104.70 US cents until negotiations were concluded.

If the euro zone nations agree to a bailout payment for Greece and a restructuring of its debt, the Australian dollar is expected to rally, but it will slide if the negotiations fail, Mr Ive said.

The ministers are due to meet again on Monday for their third effort to agree on unlocking a 31.2 billion euros ($A39.03 billion) slice of aid for Greece as it teeters on the verge of bankruptcy.