* Euro, stocks off early highs
* Spanish, Italian debt yields reverse initial decline
* Wall St extends last week’s rally
By Rodrigo Campos
NEW YORK, June 11 (Reuters) - A relief rally after the approval of a rescue package for Spanish banks worth up to $125 billion started to wear off on Monday as investors worried about both the details of the deal and the upcoming Greek election.
Wall Street opened higher to extend last week’s rally, but indexes were off their early levels. The S&P 500 gained 0.2 percent.
Investors were concerned about how the bailout, struck by euro-zone finance ministers over the weekend, would be financed. A Greek election on Sunday that could put Athens on a path to leaving the currency bloc was also limiting enthusiasm.
Spanish and Italian bond yields rose, reversing the decline that came after the financing announcement. Investors worried the action on Spain was a temporary solution that doesn’t address the question of how to kick-start growth in the bloc’s fourth-largest economy.
“The size of the deal is meant to show a real commitment on the part of the euro zone to stabilize the system, and that’s something the market is taking solace in,” said Robert Pavlik, chief market strategist at Banyan Partners LLC in Palm Beach Gardens, Florida.
“However, this just moves the problem down the road and shows how nervous the EU was going into the Greek election.”
The Dow Jones industrial average rose 46.70 points, or 0.37 percent, to 12,600.90. The S&P 500 Index added 3.24 points, or 0.24 percent, to 1,328.90. The Nasdaq Composite gained 4.04 points, or 0.14 percent, to 2,862.46.
The Euro STOXX 50, the euro zone’s leading index of blue-chip shares, was up 0.9 percent and Spain’s IBEX 35 was 1.1 percent higher, near its session low.
Global shares as measured by MSCI gained 0.9 percent.
The euro also gave up half its early gains, to trade around $1.2541.
“The risk rally fell flat really quickly,” said Greg Anderson, G10 strategist at CitiFX, a division of Citigroup in New York. “People are also very nervous ahead of the Greek elections and there are plenty of other worms in the can.”
Highlighting the uncertainty, EU and German officials said on Monday that Spain would face supervision by international lenders after the bailout, contradicting previous comments from Spanish Prime Minister Mariano Rajoy.