New York - The euro rose and Wall Street stocks opened
higher on Friday after words from the heads of France and Germany hinted at an
aid deal to save Greece from a default.
Speculation that the heavily-indebted eurozone nation could
receive €120bn before it runs out of cash this summer offered a measure of
comfort to investors in a week of exceptional volatility across all financial
markets.
Investors, less nervous, reduced their holdings of low-risk
government bonds. However, a drop in oil prices and the firmness of gold and
the Swiss franc - traditionally seen as a safe haven currency - signalled risk
aversion remains at elevated levels.
German Chancellor Angela Merkel said on Friday that Germany
and France wanted a quick solution to the impasse over a new aid package for
Greece.
French President Nicolas Sarkozy chimed in, saying that
"there was no time to lose", suggesting that a deal to rescue Greece
could be reached quickly.
"After a couple of volatile sessions earlier this week,
the market is taking Sarkozy's words as comfort and that is translating into a
rebound this morning," said Andre Bakhos, director of market analytics at
Lek Securities in New York.
On Wall Street, the Dow Jones industrial average was up
82.95 points, or 0.69%, at 12 044.47. The Standard & Poor's 500 Index was
up 9.15 points, or 0.72%, at 1 276.79. The Nasdaq Composite Index was up 23.98
points, or 0.91%, at 2 647.68.
The FTSEurofirst 300 index of top European shares was up
0.2% at 1 086.32 points, but has shed over 1% this week.
The MSCI world equity index was last up 0.7%, rebounding
from a three-month low of 326.01 struck earlier in the session.
Optimism over another lifeline for Greece also boosted
Europe's single currency after hitting a three-week low against the dollar on
Thursday. The euro was up 0.5% on the day at $1.4278, paring earlier losses in
volatile trade.
The Swiss franc, which strengthens with risk aversion, was
firm against the dollar at $0.8475.
The rebound in stocks and the euro came primarily at the
expense of bonds.
September US Treasury and German Bund futures fell 17/32 and
41 basis points respectively after setting contract highs on Thursday.
Spot gold last traded at $1 529.04 an ounce, compared with
$1 528.35 in New York late on Thursday. The precious metal is heading for its second
consecutive weekly drop.
In oil trading, US crude futures were down 1.5% at $93.50 a barrel, while August Brent crude in London was down 60 cents at 82 cents at $113.21.