* World stocks at 6-1/2 month peak on Greece bailout hopes
* Dollar at 3-1/2 month high vs yen
* Spain, Italy bond yields, spreads fall
By Alessandra Prentice
LONDON, Feb 17 World stocks hit a 6-1/2
month peak on Friday and the euro bounced higher from a
three-week low against the dollar as hopes Greece will seal a
long-awaited bailout deal next week fuelled risk appetite.
A strong sentiment boost from Thursday's upbeat U.S. jobs
and factory activity data carried over into European trade, with
U.S. stock futures pointing to a firmer open on Wall Street and
pushing the dollar to a 3-1/2 month high against the yen.
German government bonds fell while Italian and Spanish
sovereign debt yields dropped as investors anticipate Greece
moving closer to averting a disorderly default.
The country expects to get approval on Monday from euro zone
finance ministers to begin a debt swap with private bondholders,
a spokesman for the Greek government said
. But analysts said problems remain.
"I think we'll get this Greek deal and the euro will edge
higher. But Greece is clearly not out of the woods and its
problems will be revisited many times in coming months," said
Paul Robson, currency strategist at RBS.
The MSCI world equity index rose 0.7 percent
to its highest since August, while European stocks were
up 0.7 percent, hitting a 6-1/2 month high.
Emerging stocks added 1.2 percent, having risen
more than 15 percent since the start of 2012.
U.S. stock futures rose 0.2 percent. The S&P 500
index jumped to a new nine-month peak on Thursday after
U.S. labour, manufacturing and housing data suggested the
recovery continued at a steady pace.
"Generally investors are only trading for the short-term,"
Mark Foulds, head of equity sales at ETX Capital, said.
"They are being attracted by the more volatile sectors such
as the banks which will do well if there is a second Greece
bailout, although this could shift to the more defensive sectors
if it does not happen."
The euro rose 0.2 percent to $1.3165, bouncing from
the three-week trough of around $1.2973 hit on Thursday. The
dollar rose as high as 79.21 yen, but lost 0.1 percent
against a basket of major currencies.
The yen has been under pressure after the Bank of Japan
boosted asset purchases and set an inflation goal of 1 percent
on Tuesday, in a more aggressive monetary policy to pull the
ailing economy out of deflation.
AWAITING GREECE BAILOUT
Italian 10-year government bond yields fell 11
basis points at one point to 5.60 percent, tightening the spread
over German Bunds to 369 bps. Equivalent Spanish
yields fell 8 bps to 5.28 percent.
Bund futures fell 36 ticks.
Euro zone officials said on Thursday they were putting the
finishing touches to Greece's bailout for approval on Monday,
which means Athens would finally be able to proceed with a bond
swap with private creditors aiming to cut its debts by 100
The bailout money will be disbursed only after the debt
restructuring takes place. Jitters remain due to the tight
schedule, with Greece needing to secure the funds before March
20, when it needs to pay back debt worth 14.5 billion euros.
Brent crude oil was steady trading at around $120
per barrel, having risen nearly 8.5 percent so far this month,
supported by supply concerns as European buyers sought
alternatives to sanctions-hit Iranian oil.