World stocks rose on Friday, boosted by expectations that Greece will avoid a referendum on a new bailout package, easing imminent concerns of a Greek default and the possible shockwaves through the euro zone.

The euro steadied around $1.38 after rising 0.5 percent in the previous session, supported by hopes the Greek referendum on a new bailout agreed last week would be called off. That outweighed the impact of the European Central Bank's surprise 25 basis point interest rate cut on Thursday.

However, political uncertainty in Greece continued to unnerve investors and markets were also watching developments in Italy, which has agreed to have the IMF and European Union monitor its progress on long-delayed economic reforms, senior EU sources said on Friday.

U.S. monthly jobs data, due at 1230 GMT (8:30 a.m. EDT), will also keep investors on tenterhooks.

Greek Prime Minister George Papandreou faces a cliff-hanger confidence vote later on Friday. But government sources said even if he survives the vote, his days as Greek leader looked numbered following a deal with his cabinet under which he agreed to stand down after negotiating a coalition with the conservative opposition.

It seems a Greek drama has been avoided for the time being as there are some signals that the proposed referendum on the bailout package will be scrapped, Koen De Leus, strategist at KBC Securities in Brussels, said.

But the situation is far from clear yet and there is a possibility that the Greek government might fall, which would mean that no bailout money will be available to them for some time. Any such outcome would create more uncertainties.

Financial markets were rocked earlier this week when Papandreou announced Greece would hold a referendum on whether to accept the new bailout plan, agreed at a euro zone summit only last week. After a tumultuous day in Greek politics on Thursday, the chances of the referendum being held looked unlikely.

Europe's FTSEurofirst 300 <.FTEU3> added 0.3 percent early on Friday, while yields on Italy's 10-year government bonds steadied at 6.201 percent after hitting 6.4 percent on Thursday.

This referendum seems to be off the table and as there was a case for a disorderly default and Greece leaving the euro, this has been prevented for the time being, that's why we're seeing a pickup in risk appetite, said Rainer Guntermann, a rate strategist at Commerzbank.

World stocks measured by the MSCI All-Country World Index advanced 0.7 percent, though the gauge is down 3 percent for the week, on track to snap five straight weeks of gain, whip lashed by Papandreou's referendum call.

In Asia, Japan's Nikkei average <.N225> climbed 1.9 percent on Friday.

Copper prices put on 1 percent to trade below $8,000 a tonne, while Brent crude steadied after gaining more than $1 to more than $110 a barrel in the previous session.

However, the impact of Greece's debt problems on the real economy will probably last for some time, with many European banks writing off their exposure there and trying to insulate themselves if Italy and Spain were being sucked into the crisis.

Commerzbank said on Friday it would accelerate a pullback from euro zone countries and cut risky assets to avoid another state bailout after a 798 million euros impairment on Greek assets pushed it to a third-quarter operating loss.

Similarly, Royal Bank of Scotland expected difficult market conditions in the fourth quarter, with banks around the world hit by the sovereign debt crisis, and said it had taken more writedowns on its Greek exposure.

(Additional reporting by Atul Prakash and Emelia Sithole-Matarise in London; Editing by Susan Fenton)