Stocks rose on Friday and the euro steadied on hopes that a fractious European Union will agree on a bailout package for Greece within days as it struggles to keep the debt crisis from spreading to other weak countries.
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.
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.
German politicians have said the bailout could be worth 100-120 billion euros ($133-160 billion) over three years, two to three times the size of an original rescue plan for aid in 2010.
The euro rose to $1.3260 in early Asian trade, from $1.3242 late in New York on Thursday, as hopes of a Greek rescue package spurred investors to cover short positions betting against the single currency. But it later pared gains to stand little changed by late morning.
Traders said the mood on the euro remained bearish, noting Greece was facing a painful, multi-year crisis which is likely to test EU unity repeatedly. And, even if the rescue package is convincing, markets will remain worried about other heavily indebted EU members such as Portugal and Spain.
The situation ... remains highly fluid with FX markets trading on headlines as they hit the wires, JP Morgan said in a note. We remain cautious in our view toward the euro precisely for this reason but remain more confident in being short where there is a strong macro fundamental reason to do so. Economists said euro zone states could end up footing a bill of half a trillion euros ($650 billion) to save several nations if they failed to engineer a Greek bailout that calmed markets. Germany in particular has baulked at helping out less fiscally responsible EU members.
Asian shares outside of Japan rose 0.9 percent on optimism over the aid talks and gains in U.S. stock markets, while Japan's Nikkei rose 1.4 percent after being shut for a holiday on Thursday.
The ex-Japan index looked set to end the week little changed, with a gain of around 2.6 percent for the year-to-date after rallying nearly 70 percent in 2009.
U.S. stocks saw their best day in nearly two months, with main indexes climbing as much as 1.6 percent, as investors welcomed a string of robust earnings reports.
Hong Kong's Hang Seng Index climbed 1 percent after three sessions in the red, as selling pressure eased on Europe's largest lender HSBC.
HSBC rose 1.8 percent amid hopes that Greece could avert a disastrous default.
We should see some long-term capital coming back to stocks now that worries over Greece are easing, said Francis Lun of Fulbright Securities.
Key share indexes in Australia and South Korea rose 0.7 percent.
U.S. crude oil futures extended gains above $85 a barrel as the euro continued to gain against the dollar, lowering costs for market players who use the currency to trade the dollar-denominated commodity.
Gold spiked just over 1 percent to around $1,173 an ounce on signs investors were plowing more capital into bullion markets to hedge against problems in Europe.
The dollar was little changed against a basket of major global currencies.
(Additional reporting by Anirban Nag; Writing by Kim Coghill; Editing by Paul Tait)