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Greece aid plan hopes lift stocks

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.

 
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