Europe's shares advanced on Friday, led higher by banks after a media report that stringent capital requirements for European banks could be relaxed, and helping power world stocks up for the fourth straight day.
The dollar fell across the broad, while 10-year U.S. Treasury yields stabilized just above 3 percent after falling to a six-month low overnight on the back of unexpectedly weak consumer spending numbers in U.S. first quarter growth data.
Germany's benchmark 10-year Bunds steadied above 3 percent after probing below the key psychological level due to concerns over a Greek debt restructuring and its impact on other heavily-indebted peripheral countries.
The weaker dollar along with persistent Middle East tensions helped Brent crude to trade above $115 a barrel, though it was still headed for its first monthly loss since last August.
Banks in the European Union could avoid part of the Basel III capital requirements under draft legislation implementing the globally agreed standards, the Financial Times said.
There is a big chance that they don't have to go out to shareholders to ask for more money and that is the main advantage because a capital increase will weigh on their stock prices, said Koen de Leus, strategist at KBC Securities.
It's good for banks, but it's not good for regulation. In the long-term it's not a good thing for financial stability.
The FTSEurofirst 300 <.FTEU3> index of leading European shares gained 1 percent, while banks in the region <.SX7P> rose 1.7 percent with Credit Agricole
Helped by firmer European shares, world equities measured by the MSCI All-Country World Index rose 0.8 percent, though they were still set for their biggest monthly percentage losses in a year.
Emerging market shares <.MSCIEF> rose 0.9 percent, but in Asia, Japan's Nikkei average <.N225> slipped 0.4 percent.
The dollar fell 0.6 percent against a basket of currencies and was down 0.9 percent against Swiss francs at $0.8575.
Jeremy Stretch, currency strategist at CIBC, said that -- as long as one assumed the Greek situation was not spiraling out of control -- positive signs from the Basel report for European banks and negative signs on U.S. growth together added up to a big move lower for the dollar.
Both (euro and dollar) have fairly big negatives ... they're struggling to outweigh each other on a durable basis, Stretch said.
The euro was up 0.8 percent at $1.4252 and down 0.1 percent at 1.2223 Swiss francs.
Brent crude prices rose 0.3 percent, though they were down more than 8 percent for the month. Copper prices put on 1.7 percent, but they were on track for their third straight monthly losses.
Yields on benchmark 10-year Treasuries were up 1.5 basis points at 3.0736 percent after falling more than 7 basis points overnight.
(Additional reporting by Harpreet Bhal, Naomi Tajitsu and Marius Zaharia)