The euro rose while euro zone government bonds fell on Friday after Greece revealed higher-than-expected budget revenues, while expectations for solid corporate results pushed world stocks higher.
The premium investors demand for holding 10-year Greek debt rather than German bunds fell while the default insurance cost for the country also eased after Greek budget revenues exceeded target, thanks to a one-off tax on big corporations.
The euro has been under pressure, hitting a nine-month low last week, while investors have sought safety in the safest German debt due to concerns about the ability of Greece to finance its debt. "Greece is still a major concern and the Greek curve is going to stay under pressure at the short end," said Peter Chatwell, rate strategist at Credit Agricole CIB.
"But I think much more widening from here would be risky… concerted selling is difficult to envisage with so many uncertainties and possibilities due next week."
The euro rose a quarter percent to $1.3583, moving away from last week's nine-month low.
The MSCI world equity index rose 0.4 percent while the FTSEurofirst 300 index rose 0.4 percent, with resource shares leading the move higher. U.S. stock futures were steady to higher.
"Generally, corporate results have been good and have surprised on the upside in both the top line and the bottom line," said Mike Lenhoff, chief strategist at Brewin Dolphin.
According to Thomson Reuters data, the quarterly earnings growth rate for S&P 500 firms stood at 214 percent in the fourth quarter, after contracting 14.7 percent in the previous three months.
The growth rate is expected to remain solid at 37 percent in the first quarter and double-digit expansion is set to continue towards the final quarter of 2004.
Emerging stocks gained 0.9 percent.
U.S. crude oil slipped 0.14 percent to $78.05 a barrel.
Bund futures were steady while two-year euro zone government bond yields hit a record low of 0.825 percent. The premium investors demand to hold 10-year Greek debt rather than German bunds fell to 341 basis points. The five-year credit default swaps fell to 379 basis points.
