European stocks hit their highest level since July on Friday, keeping the benchmark global equity index near a 7-1/2 month peak, while crude oil rebounded as this week's robust economic data from both sides of the Atlantic attracted investors to risky assets.

A potentially strong print on U.S. inflation data due later, driven by a recent rise in oil prices, could fuel more selling in U.S. Treasuries and support the dollar after the benchmark 10-year yield hit its highest level since October on Thursday.

U.S. shares gained on Thursday, with the S&P 500 <.SPX> closing above 1,400 for the first time since 2008, partly driven by strong regional manufacturing data.

Investors' risk aversion has fallen dramatically since November, mainly due to the positive impact of the two successive long-term refinancing operations of the European Central Bank, Olivier Huet, fund manager at Edmond de Rothschild, which manages a total of 12.4 billion euros, said.

Fears that a credit crunch would have disastrous effects on the economy have evaporated.

The MSCI world equity index <.MIWD00000PUS> was slightly higher on the day, while European stocks <.FTEU3> added 0.2 percent to set their strongest level since July.

Implied volatility on the EuroSTOXX 50, a crude gauge of risk aversion, fell to 11-month lows <.V2TX>. U.S. stock futures pointed to a slightly firmer open on Wall Street later.

Emerging stocks <.MSCIEF> were down a quarter percent on the day.

Brent oil rose 0.3 percent to $123.03 a barrel. Rising tensions between Iran and the West have been fuelling an oil rally that has forced Western leaders to prepare a release of their strategic oil reserves.

German government bond futures, seen as one of the safest European investment bets, fell 16 ticks while the yield on 10-year bunds rose to 1.988 percent. The yield on 10-year U.S. Treasury notes stood at 2.2958 percent, staying below the 2.35 percent hit on Thursday, which was the highest since late October.

Treasuries suffered their worst sell-off in four months this week as expectations for stronger growth in the U.S. economy and reassuring stress test results for a majority of domestic banks encouraged investors to dump low-yielding government bonds.

Jeffrey Lacker, president of the Richmond Federal Reserve, said he dissented against the central bank's decision this week to hold interest rates near zero until at least late 2014 because he thought rates would need to rise some time next year.

The dollar <.DXY> gained a quarter percent against a basket of major currencies, just off a two-month high set on Thursday.

The euro fell 0.1 percent to $1.3060.

(Additional reporting by Atul Prakash)