European shares rose modestly on Friday, lifted by gains in banking stocks, but concerns over Greece's large debt burden remained, keeping the euro on the back foot against the dollar.
The boost to banks came as British lender Lloyds Banking Group
There are no particular dangers out there that are going to spoil the party. The unexpected and very positive trading statement from Lloyds ... was terrifically encouraging, said David Buik, senior partner at BGC partners.
The MSCI world equity index <.MIWD00000PUS> was up 0.2 percent, while in Europe the FTSEurofirst 300 index <.FTEU3> rose 0.3 percent, tracking rises in the U.S. and Asia.
I don't think the (equity) market is due for a particular correction because the dividends have been reasonable and nobody wants to buy the bond market if they think yields are going to go up, Buik said.
Some volatility may be expected in the market, however, due to 'quadruple witching' -- the expiration of U.S. stock index futures, stock index options, stock options and individual stock futures -- later on Friday.
Bund futures were steady while emerging stocks <.MSCIEF> rose 0.1 percent.
Worries over Greece and doubts over whether euro zone states will agree any form of support package still weighed on sentiment, keeping the euro weak and hampering peripheral debt.
The euro was down 0.1 percent against the dollar at $1.3592, while increased risk aversion helped flows into the U.S. currency. The dollar <.DXY> rose 0.3 percent against a basket of major currencies to 80.323.
Greece is not off the radar yet. It will continue to dominate headlines, and weigh on the euro, said Sverre Holbek, currency strategist at Danske in Copenhagen.
Markets will be sensitive to further rhetoric on Greece's debt situation after the country raised the stakes on Thursday in its quest for EU help, saying it could not achieve promised deficit cuts if borrowing costs remain so high.
Investors were concerned it could prove extremely difficult to construct a euro zone financial safety net for the currency area's most heavily indebted member, partly due to German reluctance.
The premium investors demand to buy 10-year Greek government bonds rather than core German Bunds continued to rise, with the 10-year Greek/German government bond yield spread widening to 324 bps from 318 bps at Thursday's settlement, according to Tradeweb data.
Oil prices fell, with U.S. crude oil down 0.6 percent at $81.72 per barrel, weighed by gains in the U.S. dollar and as a rise in OPEC exports loomed.
Gold prices were also pressured by dollar gains, although traders said Greece's debt problems could still spur safe-haven buying. Gold traded at $1,122.80 an ounce, down from $1,125.45 late in New York on Thursday.
(Additional reporting by Harpreet Bhal and Naomi Tajitsu, editing by Mike Peacock)