World stocks firm on Greek hopes, euro above lows

World stocks hit a fresh 6-1/2 month peak on Friday, the dollar jumped to a 3-1/2 month high against the yen and the euro held above recent lows as hopes Greece will seal a long-awaited bailout deal next week fuelled risk appetite.

A strong sentiment boost from Thursday's upbeat US jobs and factory activity data also carried over into European trade.

Italian and Spanish government bond yields fell while oil rose broadly as investors anticipated Greece will move 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.

"The market is remaining strong because of the reasonable news out of Greece, but generally investors are only trading for the short term," Mark Foulds, head of equity sales at ETX Capital, said.

The MSCI world equity index rose 0.6% to its highest since August, while European stocks rose nearly half a% to hit a 6-1/2 month high.

Emerging stocks added more than 1%.

The euro was little changed at $1.3130, but holding well above the three-week trough of around $1.2973 hit on Thursday. The dollar rose as high as 79.17 yen and was little changed against a basket of major currencies.

"The selloff in the yen is down to a combination of a more buoyant mood in equities and the determination of the Japanese authorities to weaken the currency by injecting more money into the economy," said Michael Derks, chief strategist at FXPro.

"It would be a surprise though if we saw much more yen weakness as we could see a flood of yen purchases in March as Japanese year-end approaches."

In a surprise move on Tuesday, the Bank of Japan boosted asset purchases and set an inflation goal of 1%, in a more aggressive monetary policy to pull the ailing economy out of deflation.