BUSINESSDESK: Equity markets on both sides of the Atlantic reflected optimism that the Greeks will be able to form a government this time but concern about the ability of Spain to stave off financial disaster.

The euro weakened, as did the Dow Jones Industrial Average in late afternoon trading in New York, last down 0.12%. Even so, the Standard & Poor's 500 Index was last up 0.16%, while the Nasdaq Composite Index was 0.73% stronger.

Eyes, and hopes, are on US Federal Reserve policy makers who start a two-day meeting overnight (NZT).

“A lot of people are waiting for the Fed, as there are still tons of questions, and a lot of people are waiting on the sidelines to see what happens,” Jason Rogan, director of US government trading at Guggenheim Partners, a New York-based brokerage for institutional investors, told Bloomberg News.

In Europe, the Stoxx 600 Index ended the day with a gain of 0.1% on the previous session, during which the index rose as much as 1.1% and fell as much as 0.4%.

While investors applauded the small victory for the conservative New Democracy party in Sunday’s Greek election, removing the spectre of a Grexit from the euro, there is plenty of concern left.

“We don't know how the Greek government is going to shape out and what reforms they'll be able to put into place and there's still considerable uncertainty in Spain about their bank issues," Tom Schrader, managing director of US equity trading at Stifel Nicolaus Capital Markets in Baltimore, told Reuters.

"As we go through this period of indecisiveness ... you're going to see the markets basically whip around in a sideways pattern."

Concern intensified on Spain as its 10-year bond yields surged to another record since 1999, touching 7.29% earlier in the day, after signs that the nation’s already-troubled banks are facing an increasing amount of headwind.

Bad loans as a proportion of total lending at Spain’s financial institutions rose to 8.72% in April from 8.37% in March, the Bank of Spain said on its website.

Europe was a key concern on the agenda of the Group of 20 leaders meeting today in Mexico.

They are set to urge the eurozone to break the vicious link between its struggling banks and strained state finances, according to a draft communique prepared for the G20 summit and seen by Reuters.

It said Europe would take "all necessary policy measures" to resolve its crisis and said G20 leaders looked forward to the eurozone working closely with a new Greek government to keep it on a reform path and in the currency bloc.

Oil fell amid concern Europe’s crisis will dampen demand for the commodity. Brent August crude dropped $US1.48 to $US96.13 a barrel by 1.15pm EDT.

“There is a bearish economic contagion in Europe and it’s essentially bringing prices down,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, told Bloomberg.

The euro fell from the highest level in a month, sliding 0.5% to $US1.2572 at 1.38pm New York time.