The euro stabilised in volatile trading and stocks rose yesterday after reports that Greece and its creditors, including the European Union and IMF, had reached an agreement that will provide debt relief to the struggling nation.
The agreement between Greece and the Brussels Group, comprised of major creditors that include the EU and International Monetary Fund, will include no more wage or pension cuts to help get more aid for the nation, which is in danger of missing debt payments.
That helped boost the euro against the dollar, and pushed European shares higher late in their session. US equity markets also rallied modestly, recovering some of Tuesday's losses.
The dollar had hit a fresh eight-year high against the yen but gave up gains against the euro, with the single currency lately at $1.0888, up 0.1 per cent on the day.
Sources close to the lenders have so far not indicated enough progress to warrant drawing up any kind of agreement, however. Greece and its European creditors have played down fears that Athens would default on a payment to the IMF next week. The country is due to pay the IMF 1.6 billion euros in June over four installments.
The benchmark 10-year Greek government bond saw its yield decline sharply, falling to 11.53 per cent from 11.89 per cent a day earlier.
The FTSEuroFirst 300 leading index of 300 top European shares was up 1.2 per cent to 1621.74 and Britain's FTSE rose 1.3 per cent to 7037. France's CAC was up 1.9 per cent at 5178.21 and Germany's DAX was up 1.1 per cent to 11751.61.
The Dow Jones industrial average rose 88.48 points, or 0.49 per cent, to 18,130.02, the S&P 500 gained 10.3 points, or 0.49 per cent, to 2,114.5 and the Nasdaq Composite added 36.71 points, or 0.73 per cent, to 5,069.46.
In bond markets, the 10-year German Bund yield rose two basis points to 0.56 per cent, while the 10-year US Treasury yield was up four basis points at 2.17 per cent .
After tumbling nearly three per cent on Tuesday, US crude recovered some ground before giving up those gains. It was last down 0.3 per cent at $57.88 a barrel, while Brent fell 1.5 per cent to $62.74 a barrel.
Gold gave up earlier gains and was last down 1.4 per cent at $1,187 an ounce.