NEW YORK, June 24 (Reuters) - Investors are pulling cash
from some U.S. money market funds on worries about the funds'
investments in European banks in case of a Greek sovereign
default that they fear could roil the $2.7 trillion industry.

Despite signs of progress on a rescue for Greece, assets of
non-Treasury money market funds -- which are perceived as
riskier than funds that own only U.S. government securities --
declined by $3.6 billion on Thursday, while assets of
Treasury-only funds rose by $5.2 billion, according to Crane
Data.

There were reports on Friday that banks and policymakers
moved closer to an aid deal for Greece in advance of a
parliamentary vote on drastic deficit reduction next week, but
investors remained on edge. 

Investors are scrambling for U.S. Treasury bills, a move
that pushed T-bill rates into negative territory this week,
analysts said.

But there is no evidence yet of strain in the financial
system as seen during the 2007-2009 global credit crunch.

European banks are still raising short-term funds through
sales of U.S. commercial paper and certificates of deposits
with a miniscule rise in borrowing costs.

"The market is just waiting," said Jim Lee, head of
short-term markets and futures strategy at RBS Securities in
Stamford, Connecticut. "If there were a situation where there
was a restructuring of Greek debt, then the contagion would
start."

Corporate treasurers and money managers are withdrawing
funds from institutional money market funds that invest in
commercial paper and other debt issued by European banks. They
are putting some of the cash into bank accounts and less risky
money funds that own only U.S. government securities, analysts
said.

Assets of institutional Treasury money market funds rose by
$5.23 billion to $601.5 billion in the week ended Wednesday,
while assets of non-Treasury money funds plunged by $16.62
billion to $1.069 trillion, the Investment Company Institute
reported Thursday.