Greek Prime Minister Lucas Papademos is negotiating with other Greek politicians to accept a draft deal that could restructure Greek debt and stave off default.
American banks got a much needed boost from news that the Italian Senate passed an important austerity package while Greece officially swore in its new Prime Minister.
Traders are watching the political situation in Italy, where Prime Minister Silvio Berlusconi has pledged to step down, despite continuing to try to reclaim majority support.