LONDON (Reuters) - The Greek crisis may be approaching its end game but some investors are waiting for the dust to settle and snap up euro zone stocks and bonds - whether a deal to prevent Athens defaulting is reached or not.
Failure to reach agreement with international creditors will see Greece default on 1.6 billion euros of debt repayments to the International Monetary Fund due on June 30, a scenario that could ultimately lead to it exiting the euro zone.
Euro zone financial markets have gyrated sharply in recent days as the likelihood of default has drawn closer, with Spanish bonds in particular bearing the brunt of the contagion.
But Russell Investments and Pictet Asset Management told Reuters on Tuesday that any contagion will be shallow and brief, and that they stand ready to buy a range of euro zone assets should they get much cheaper.
"Any material downside, and we're getting close to that point, will be a buying opportunity for us," said Wouter Sturkenboom, senior investment strategist at Russell Investments.
He said a further fall of as little as 2-3 percent in both euro zone equities and bonds could prompt them to buy again.
Pictet Asset Management's chief strategist Luca Paolini said that a Greek default would trigger short-term volatility and market stress, probably leading to a correction of highly valued stock markets.
"Having said that we'd rather use that as a buying opportunity because we still believe that the trend in Europe is positive," he said.
"Quantitative easing is working, the euro is weak and credit growth is recovering. We would rather use that as a buying opportunity for European assets."
Both said Greece is too small a problem to derail the euro zone economic recovery and that serious contagion risk is limited because almost all of Greece's debt is held by public sector institutions as opposed to private sector banks and investors.
Still, ripples are being felt across the continent. Implied volatility in the euro's exchange rate with the dollar rose to its highest in three and a half years on Tuesday, while the premium demanded by investors for holding 10-year Spanish bonds over safer haven German bonds rose to 175 basis points.
That was the widest spread in over a year. And if Spanish bond yields close this week higher it will be the eighth week in a row that they have risen, a run not seen in over 20 years.
A closely watched monthly survey of fund managers by Bank of America Merrill Lynch on Tuesday found that investors appeared to be too sanguine on Greece. More than 40 percent of respondents in the global poll said they expected a favourable resolution to the crisis, and only 15 percent said Greece will ultimately leave the euro zone.
"Investors do not appear to be positioned for the Greek 'worst case'," BAML said in the report. "We believe a peaceful Greek outcome is a necessary condition for a (stock market) rally."
(Reporting by Jamie McGeever and Emelia Sithole; Editing by Dominic Evans)