World stocks waver as investors await Greece deal

European stocks mostly fell yesterday as investors awaited news on a bailout deal for Greece expected this weekend, while the euro gained and bond markets eased at the end of a tumultuous week.

The London stock market fell 1.15 per cent, Paris slipped 0.62 per cent and Frankfurt edged down 0.15 per cent.

Paris stocks were down 3.4 per cent compared to the previous Friday.

All three main markets had rallied on Thursday on news that a Greek debt bailout was near, with sentiment also lifted by positive company results.

"Expectations of an announcement about a joint EU-IMF bailout of Greece within days have helped soothe investor anxiety about an imminent Greek default," said CMC Markets analyst Michael Hewson.

"And (this) has seen the euro continuing to pull away from this week's 12-month lows," he added.

The euro jumped to $1.3300 during late trading in London, up from $1.3229 in New York late Thursday, and after striking a one-year low of 1.3115 on Wednesday.

As pressure eased, Greek bond yields, indicating the price the government would have to pay to raise new money on financial markets, fell under nine per cent.

The rate on 10-year paper came to 8.938 per cent against 9.039 per cent on Thursday. The yield on Wednesday soared to a record 11.142 per cent.

"Expectations are clearly running high that the Greek bailout deal will be sealed in the near term and this is helping lift equities as we move towards the long weekend," said IG Index analyst Anthony Grech.

"Financial stocks have been generally cheered by the prospect that these large tranches of sovereign debt they are holding won't go bad."

Asian stocks rallied at the end of a tough week, with sentiment boosted by hopes that a Greek bailout is in sight. Tokyo bounced 1.21 per cent higher and Hong Kong won 1.59 per cent in value.

But US stock markets were down as investors worried about the fallout from fraud charges against Wall Street behemoth Goldman Sachs and an oil spill in the southern United States.

The Dow Jones Industrial Average fell 0.15 per cent in early trading, while the Nasdaq index was down 0.48 per cent.

Markets were earlier buoyed by a report showing the US economy continued to grow in the first quarter, albeit at a slower rate than expected.

Estimated growth was 3.2 per cent, lower than the expected 3.3 per cent.

There was also greater optimism about the prospect of Greece getting tens of billions of euros in emergency loans in time to avoid a debt default, although social tensions in Athens were likely to rise.

Greece, the European Union and the International Monetary Fund are "very close" to agreeing austerity measures needed to secure badly-needed loans, and a deal will be announced by Sunday, a Greek government source said.