Stocks bounced Friday after France and Germany said a comprehensive euro zone debt deal was on its way, if a little late, although a weaker euro and rising bund futures suggested not everyone was convinced.
The long-running saga was meant to be concluded at a meeting of regional leaders Sunday, but disagreement over the makeup of the sovereign rescue fund, the EFSF, stalled talks and sparked a selloff in riskier assets Thursday.
A communique from French President Nicolas Sarkozy and German Chancellor Angela Merkel followed the European close, in which they said the wide-ranging plan would now be announced no later than Wednesday.
That and earnings news buoyed U.S. and Asian stocks somewhat, which in turn carried through patchily into the start of European trading Friday, albeit with little conviction as traders wait for firm details on the plan.
The enthusiasm, bordering on euphoria, that appeared to have swept up risk assets early in the week has now entirely evaporated and investors appear primed for a critical weekend almost expecting to be disappointed, Altium Securities said in a note.
At 0723 GMT, the MSCI world equity index <.MIWD00000PUS> was up 0.3 percent while the FTSEurofirst 300 <.FTEU3> index of leading European blue chips was up 0.7 percent, in a bounce from its 1.4 percent selloff in the previous session.
Asian stocks <.MIAPJ0000PUS> were also slightly higher, up 0.2 percent, following modest gains for U.S. indexes overnight <.N>.
While shares recovered some of their lost ground, currency and fixed income traders proved less amenable to the delay, extending their moves from the previous session with many investors unwilling to go long.
The euro edged higher in early trade before falling back 0.3 percent against the dollar by 0724 GMT to 1.3741. It also fell against the yen and Swiss franc. The dollar meanwhile climbed 0.1 percent against a basket of currencies <.DXY>.
The euro is all being driven by short term players with longer term investors like asset managers all holding short positions and on the sidelines, said Manuel Oliveri, currency strategist at UBS in Zurich.
Bund futures also reversed course shortly after the open, ticking lower before rising 0.1 percent to 135.53 by 0725 GMT.
I think there is an element of disappointment, said one trader, pointing to the delay. So today, (we are) not really expecting too much risk to be placed on by clients, instead probably some squaring of positions and taking off of risk into the weekend.
Among the major commodities, Brent crude oil was steady at around $109 a barrel, in rangebound trade ahead of the European leaders' summit, while U.S. crude oil was slightly firmer.
After heavy falls in the previous session, base metals including copper and zinc both staged a partial recovery, while gold also rose.
(Additional reporting by Anirban Nag and Ana Nicolaci da Costa in London; Editing by Catherine Evans)