Stocks, euro deflated by Greek uncertainty

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The FTSEurofirst 300 <.FTEU3> index of top European shares was down 0.55 percent at 1,067.63 points. The STOXX Europe 600 euro zone Banking Index <.SX7E>, exposed to the euro zone's sovereign debt crisis, shed 1.4 percent.

Earlier, Asian stocks also lost ground, leaving global stocks as measured by the MSCI index down 0.6 percent at 326.04.

Despite the drop, the index is up more than 20 percent from it October lows as low interest rates by major central banks and a huge cash injection by the European Central Bank fuelled a rally in stocks, commodities and higher-yielding currencies.

The euro was 0.2 percent lower against the dollar at $1.3262, pulling back from a two-month high of $1.3322 reached on Thursday.

"Some of our clients remain concerned that the Greek situation could worsen from here," said Valentin Marinov, currency strategist at Citi. "With some event risk still very much out there, people may not be willing to keep sizeable risky positions ahead of this weekend's Greek parliamentary vote."

BACK TO THE DRAWING BOARD

Jean-Claude Juncker, who chairs the Eurogroup, set three conditions, saying the Greek parliament must ratify the package when it meets on Sunday and a further 325 million euros of spending cuts needed to be put in place by next Wednesday, after which euro zone finance ministers would meet again.

Analysts say that, while the Greek parliament is likely to ratify the package, rising social unrest is a mounting risk going ahead.

Growth-linked currencies like the Australian dollar and commodities like copper and oil eased as investors cut exposure to riskier assets and preferred the safety of U.S. Treasuries and German Bunds.