London - World stocks advanced on Tuesday as strong Chinese trade data reinforced optimism about the global economy, while the euro was volatile on conflicting media reports of a potential new aid deal for debt-laden Greece.
The euro briefly gained against the dollar after Dow Jones News Wires reported that Greece expected to receive fresh aid totalling €60bn ($85.71bn) as soon as June, but Greece denied it was discussing a new aid package.
China posted its biggest trade surplus in four months in April as exports hit a record on stronger global demand, highlighting strength in the world's second largest economy despite its efforts to rein in inflation.
Oil prices fell on a firmer dollar and higher margins for oil futures but surprisingly high Chinese crude imports showed demand was resilient and limited further losses.
Optimism about the pace of economic recovery after the robust Chinese data lifted the the FTSEurofirst 300 index of top European shares 0.9%. World stocks as measured by MSCI were up 0.5%.
"Markets have been reluctant to give up a lot of ground because there is confidence in a global recovery and confidence that it is turning into a sustainable expansion even if there is some loss of momentum," said Mike Lenhoff, chief strategist at Brewin Dolphin.
Greek woes
The euro see-sawed against the dollar after Greece denied negotiating a new bailout and a German lawmaker said there were signs conditons for payment of Greece's next aid tranche in late May may not be met.
The single currency fluctuated in a $1.4267-$1.1.4378 range and was last flat on the day at $1.4348.
"This seems a bit early to come up with something concrete. I think we'll get more posturing before a deal can be agreed on Greece," said Gavin Friend, currency strategist at nabCapital.
Jitters over a possible second bail-out package for Greece had pushed the single currency down 0.5% to $1.4284, nearing a seven-week low of $1.4254 hit the previous day. Against the yen, the euro was up 0.5% at 115.79, after sliding to a 6-week low in Asian dealing around 114.76.
The euro's recent fall was accelerated by last week's commodity sell-off and Monday's move by ratings agency Standard & Poor's to cut Greece's rating to B from BB-, dragging it further into junk territory.
But some analysts said it was unlikely to fall as sharply as it did a year ago when the Greek debt crisis hit financial markets, because there was now a safety net for indebted countries.
The cost of insuring Greek debt against default and its yield premium over German benchmark Bunds fell after the Dow report though bond yields remained at euro-era record highs. "It's very difficult to trade as there are so many conflicting headlines about a restructuring being the only way forward or not. Something will have to give," a bond trader said.
Oil retreats
Oil prices fell more than 1% as the dollar firmed and after CME Group Inc, the world's largest commodities exchange, raised the margin call on crude futures for a fourth time since February in an effort to curb volatility.
Brent was 94 cents lower at $114.96, recovering from a low of $113.58 earlier in the session. US crude was $1.32 lower at $101.23 a barrel, paring losses of more than 2% on Tuesday.
The oil price fall followed a volatile week of trading that saw US crude prices fall from over $114 a barrel - the highest level since 2008 - to $94 a barrel.
The CME's move to make it more expensive for speculators to trade oil futures on margin, while not completely unexpected, added to a sense that a year-long steep climb in commodity prices is on hold for now.
The impact of the margin hike on oil prices may be less severe than on silver, which fell more than 30% in late April due to a succession of margin hikes, sparking a sell-off in other commodities.
Spot silver reversed earlier losses and was last bid at $38.49.