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SYDNEY, Nov 27 AAP

November 27 2012, 5:32PM

The Australian dollar has risen on news that European finance ministers have reached a deal on Greek bailout funds.

At 1700 AEDT on Tuesday, the Australian dollar was trading at 104.80 US cents, up from 104.53 US cents on Monday.

From 0700 AEDT, it has traded between 104.55 US cents and 104.90 cents.

CMC Markets chief markets strategist Michael McCarthy said suggestions of a bailout deal being brokered had given the Australian dollar a lift.

"It was early reports of an agreement being reached which drove the Aussie up," he said.

"However, overall this has been quite a disappointing display - this agreement will mean a significant decrease in risk, and should boost risk assets across the board.

At a meeting concluded in the early hours of Tuesday (European time) finance ministers announced that Greece could receive up to 440 billion euros ($A550.03 billion).

Mr McCarthy said the dollar could rise again, if construction data due on Wednesday came out with a positive reading, but said that capital expenditure data on Thursday would be more significant.

"All of that data will speak to the potential for an interest rate cut, and that will be the focus for markets next week."

The Reserve Bank of Australia (RBA) meets on December 4 for its monthly meeting, with the market pricing in a 50-50 chance of a rate cut.

The RBA left the cash rate steady at 3.25 per cent at its November meeting, after cutting in May, June and October.

At 1700 AEDT on Tuesday, the Australian dollar was at 86.22 Japanese yen, up from 85.96 yen on Monday and at 80.70 euro cents, up from 80.68 cents at Monday's close.

Meanwhile, Australian bond futures prices were lower.

At 1630 AEDT on Tuesday, the December 10-year bond futures contract was at 96.785 (implying a yield of 3.215 per cent), down from 96.815 (3.185 per cent), on Monday.

The December three-year bond futures contract was trading at 97.270 (2.730 per cent), down from 97.290 (2.710 per cent).

JP Morgan interest rate strategist Sally Auld said bond prices had begun the day higher, but fell after the news from Brussels.

"We rallied overnight because equities weren't doing so well, people were worried about the Greek bailout, and the issue of the US fiscal cliff came up again," she said.

"Then this morning, we heard that Greece was going to get its money, so that risk was taken out of the market."

By Caroline Smith