World stocks rose to their highest in over two months on Thursday as risk appetite improved on hopes Greece will reach an agreement with its creditors and the International Monetary Fund will boost resources to tackle the euro zone debt crisis.
The euro held steady against the dollar at $1.2850 with traders awaiting bond auctions by Spain and France later in the day. So far, debt sales in the euro zone have gone without a major hitch in the wake of Standard & Poor's mass downgrade of euro zone sovereign debt last Friday.
European shares made a strong start, tracking robust gains made in Asia. The FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.2 percent at 1,037.10 points. Banks <.SX7P> topped the gainers' list following encouraging results from Goldman Sachs
Global stocks as measured by the MSCI index <.MIWD00000PUS> were up 0.35 percent at 312.04, the highest level since October 31.
Stock markets have been performing well since the start of the year, bolstered by good economic numbers from the United States and liquidity sloshing around given central banks around the world have been pumping in funds.
If you are a long-term investor, there are attractions in the equity market as corporate balance sheets are robust in many cases and cash flows are reliable, said Jeremy Batstone-Carr, strategist at Charles Stanley.
People are expecting a deal between Greece and its bondholders to be concluded soon on the basis that it takes six to eight weeks to do the paperwork necessary to avoid a default.
Investors were hopeful a bond swap deal needed to avoid a messy default would be agreed, when talks in Greece resume on Thursday after Wednesday's negotiations. If a deal is not reached, a disorderly default could occur which could tip the global economy into recession and hit company profits.
Policymakers are racing against time to stop the Greek debt crisis from spilling over to other euro zone countries.
The IMF is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with the fallout from the euro zone debt crisis.
The United States and other countries are balking, however, saying Europe must put up more of its own money.
Hopes for additional funds will rest upon the BRIC countries and Japan, Lee Hardman, currency economist at Bank of Tokyo Mitsubishi said.
It remains to be seen how receptive they are to providing further funds to support wealthy Europeans, especially as they face increasing domestic challenges themselves.
(Additional reporting by Atul Prakash in London; Editing by Anna Willard)