The euro briefly gained against the dollar after Dow Jones News Wires reported that Greece expected to receive fresh aid totalling 60 billion euros ($85.71 billion) as soon as June, but Greece denied it was discussing a new aid package.
China posted its biggest trade surplus in four months in April as exports hit a record on stronger global demand, highlighting strength in the world's second largest economy despite its efforts to rein in inflation.
Oil prices fell on a firmer dollar and higher margins for oil futures but surprisingly high Chinese crude imports showed demand was resilient and limited further losses.
Optimism about the pace of economic recovery after the robust Chinese data lifted the the FTSEurofirst 300 index of top European shares 0.9 percent. World stocks as measured by MSCI were up 0.5 percent.
"Markets have been reluctant to give up a lot of ground because there is confidence in a global recovery and confidence that it is turning into a sustainable expansion even if there is some loss of momentum," said Mike Lenhoff, chief strategist at Brewin Dolphin.
GREEK WOES
The euro see-sawed against the dollar after Greece denied negotiating a new bailout and a German lawmaker said there were signs conditons for payment of Greece's next aid tranche in late May may not be met.
The single currency fluctuated in a $1.4267-$1.1.4378 range and was last flat on the day at $1.4348.
"This seems a bit early to come up with something concrete. I think we'll get more posturing before a deal can be agreed on Greece," said Gavin Friend, currency strategist at nabCapital.
Jitters over a possible second bail-out package for Greece had pushed the single currency down 0.5 percent to $1.4284, nearing a seven-week low of $1.4254 hit the previous day. Against the yen, the euro was up 0.5 percent at 115.79, after sliding to a 6-week low in Asian dealing around 114.76.
The euro's recent fall was accelerated by last week's commodity sell-off and Monday's move by ratings agency Standard & Poor's to cut Greece's rating to B from BB-, dragging it further into junk territory.
But some analysts said it was unlikely to fall as sharply as it did a year ago when the Greek debt crisis hit financial markets, because there was now a safety net for indebted countries.
The cost of insuring Greek debt against default and its yield premium over German benchmark Bunds fell after the Dow report though bond yields remained at euro-era record highs. "It's very difficult to trade as there are so many conflicting headlines about a restructuring being the only way forward or not. Something will have to give," a bond trader said.
OIL RAFP
Oil prices fell more than 1 percent as the dollar firmed and after CME Group Inc, the world's largest commodities exchange, raised the margin call on crude futures for a fourth time since February in an effort to curb volatility.
Brent was 94 cents lower at $114.96, recovering from a low of $113.58 earlier in the session. US crude was $1.32 lower at $101.23 a barrel, paring losses of more than 2 percent on Tuesday.
The oil price fall followed a volatile week of trading that saw US crude prices fall from over $114 a barrel -- the highest level since 2008 -- to $94 a barrel.