Global equities rose and the euro held on to gains on Friday as Greece readied new austerity measures to secure a multi-billion-euro aid package that could be announced in coming days.
Shares were also buoyed by strong earnings reports from major U.S. companies, which pushed up Wall Street stocks and bolstered hopes that the world's largest economy was picking up steam, tempering worries about weakness in Europe. <.N>
World stocks measured by the MSCI All-Country World Index <.MIWD00000PUS> rose 0.3 percent at 31.0.37 in early European trade.
The FTSEurofirst 300 <.FTEU3> index rose 0.2 percent in early trade. Tokyo's Nikkei average <.N225> gained 1.2 percent after Wall Street rose more than 1 percent overnight.
The background does seem to be definitely improving for the euro zone's public debt crisis. Fundamentals for the market are still improving. The earnings that are coming through, not just on Wall Street but everywhere now, are very supportive, said Mike Lenhoff, chief strategist at Brewin Dolphin.
Sources familiar with the Greece aid talks said officials were expected to announce details of the aid package by Monday, but investors were cautious, awaiting details on the plan as well as the reaction in Athens, where angry unions are readying strikes to protest against severe austerity measures.
Euro zone finance ministers may hold a teleconference on Greece this weekend, the spokesman for Eurogroup chairman Jean-Claude Juncker said on Friday.
Greece is set to cut its budget deficit by 10 percentage points this year and next, while the aid plan from the European Union and the International Monetary Fund could balloon to 120 billion euros over three years, up from an original plan of 45 billion euros this year.
Concerns about credit risk eased somewhat as the spread between Greek and German 10-year government bond yields narrowed.
The euro was 0.5 percent higher on the day at $1.3301, as hopes of a quick Greek rescue package spurred investors to cover short positions. But it was still on track to fall some 1.5 percent for the month and concerns remained whether Greece's problems would really be laid to rest.
If the conditions of the aid are well received and the amount offered is sufficient, the euro could rise, but any gains will likely be short-lived, said Ulrich Leuchtmann, currency analyst at Commerzbank in Frankfurt.
But once those risks are off the table ... it will depend on whether Greece is able to make good on its promises to implement the terms.
The yen was little changed against the dollar after the Bank of Japan left interest rates unchanged as expected.
The bank unexpectedly released a statement saying members agreed the central bank needed to make new efforts to help strengthen the economy, but BoJ Governor Masaaki Shirakawa said there was no need for further monetary easing now.
The central bank also raised its forecasts for core consumer prices to rise in fiscal 2011/12, as expected.
Despite the turmoil in Europe caused by Greece and other peripheral euro zone countries such as Portugal and Spain, global economic recovery is seen progressing.
Markets will look to first quarter U.S. gross domestic product data due out at 8:30 a.m. ET, which is expected to show a 3.4 percent gain on quarter. U.S. crude oil futures rose to $85.83 a barrel, less than $2 away from an 18-month high of $87.09 reached on April 6. April is set to be the first month since September 2008 when the front-month contract traded continuously above $80 a barrel.
Gold prices reached their highest level this year at $1,175.40 an ounce.
(Additional reporting by Atul Prakash and Naomi Tajitsu; editing by John Stonestreet)