* Euro hits 3-week high on optimism for a Greek deal
* European shares steady, on course for 3.5 pct weekly gain
* World shares headed for their best week since mid-Sept
* Oil dips towards $110/brl as Israel-Gaza ceasefire holds
By Richard Hubbard
LONDON, Nov 23 The euro hit a three-week high on
Friday on signs of progress in negotiations to get fresh aid
cash to Greece and after an influential German survey found
business sentiment had improved.
The euro climbed 0.2 percent to $1.2906, on course
for its second week of gains against the dollar.
Equity markets saw a more muted reaction, with the
pan-European FTSEurofirst 300 index steady at around
1,105 points, but on track for its best week in about 10 months.
U.S. stock index futures pointed to modest gains when Wall
Street opens for a short post-Thanksgiving trading day, with the
retail sector in focus as the holiday shopping season begins.
Optimism on a deal to help Greece, hopes that United States
lawmakers can agree steps to avoid a fiscal crisis, and data
showing an improving global economic outlook have fuelled a
rally across riskier asset markets this week.
MSCI's world equity index was up 0.15
percent on Friday at 326.75 points, for a gain of nearly 3
percent since Monday. That will be its best weekly performance
Earlier, MSCI's broadest index of Asia Pacific shares
outside Japan rose 0.7 percent for a weekly gain
of 2.6 percent, also its best week for two months.
With the end of the year approaching, analysts say the gain
"From a seasonal perspective, December and January have been
quite decent months in the past, so I would not be too surprised
if we see a good development in equities over the next couple of
weeks," said Gerhard Schwarz, head of equity strategy at Baader
Europe's FTSEurofirst 300 index has risen in December for 12
of the last 15 years.
The economic optimism got a small boost from the latest
survey of German companies by the Munich-based Ifo think-tank,
which found firms were becoming more upbeat about the outlook
despite the euro zone crisis.
"Export expectations rose strongly and are back in the
positive area now. The orders situation and demand are
stabilising. Exports to the United States and Asia seem to be
going well," Ifo economist Klaus Wohlrabe said.
The survey followed data on purchasing manager's intentions
around the world this week, which signalled improving activity
in China and the United States, while finding conditions in
Europe had broadly stabilised at weak levels.
The hopes that Greece will get the money it needs to avoid
bankruptcy were linked to reports the International Monetary
Fund and the European Union had narrowed their differences over
the target for Greek debt reduction by 2020.
Agreement on a new debt target and how it can be reached is
a key stumbling bock in agreeing the release of 44 billion euros
($57 billion) of funds from the Greek bailout package.
"It's not the first time we have this type of news," said
ING rate strategist Alessandro Giansanti. "Until there is an
official statement, detailing what they want to do, especially
in terms of a debt restructuring, we're not going to see so much
of a reaction."
Euro zone finance ministers, the IMF and the European
Central Bank are due to meet again on Monday to agree the deal.
Ten-year German government bonds, a barometer
of investor sentiment on the euro zone crisis were 2 basis
points lower at 1.42 percent.
Greek government bond yields, however, were 5 basis points
higher at 16.49 percent - a relatively small move
for the volatile paper, which remains close to its lowest level
since the country's debt was restructured in March.
The positive German data and hopes for a Greek deal lifted
gold 0.3 percent to $1,733.34 an ounce. After gains of
around 1 percent this week, the precious metal is set to post
its best weekly rise in nearly two months.
Brent crude futures were down 22 cents at $110.33 a
barrel and U.S. crude was down 27 cents against
Wednesday's settlement to $87.11, as the fragile ceasefire
between Israel and Gaza held, easing supply concerns.
On Thursday Israel began withdrawing its army, which had
been poised to invade the Gaza Strip in pursuit of militants
firing rockets into Israel.
"Oil prices will probably be under pressure as long as the
ceasefire holds," said Filip Petersson, a commodity strategist
at SEB Commodity Research.