LONDON: World stocks rose on Friday, with Europe gaining half a percent on the last trading day of a strong quarter as investors bet ministers will agree later in the day to almost double the euro zone's crisis-fighting funds.
But the backdrop was clouded across all asset classes, having soured since mid-March due to growth concerns centred on China, uncertainty about the strength of the US recovery and the conviction that huge injections of central bank money may be no more than a panacea for Europe's debt troubles.
"All the European (share) markets have broken below their 2012 trend channels Now, indices are getting close to March lows," Aurel BGC chart analyst Gerard Sagnier said.
"We'll have to wait for the consolidation phase, which has just started, to stabilise before going 'long' again."
The FTSEurofirst 300 gained 0.5 percent, ending a three-session slump and helping lift MSCI's all-country world index 0.3 percent for an 11 percent first-quarter gain.
Wall St was also seen opening higher .
The dollar fell to a one-month low against major currencies, pressured by quarter-end flows, a flurry of softer US economic data and expectations of further monetary stimulus from the Federal Reserve.
European policymakers were poised for action in Copenhagen, where finance ministers are likely to agree to almost double the euro zone's financial safety net to insulate its most vulnerable states against debt contagion.
PAIN IN SPAIN
The move, which supported the euro, will be welcomed in Spain. The country is firmly back at the sharp end of the euro zone debt crisis and kept bond markets braced on Friday in anticipation of a budget encapsulating the problems the euro zone faces in slashing public deficits during an economic slump.
Feeling mounting pressure from markets amid popular resistance to more austerity, the government in Madrid has flagged deep spending cuts, increasing concerns that the belt-tightening demanded by the EU will only push the economy deeper into recession.
"We think that making (fiscal) ends meet will be challenging, though not impossible," Morgan Stanley said in a research note. "We expect the Spanish economy to shrink by 2 percent this year."
The yield on the country's 10-year benchmark bond was little changed at 5.43 percent, staying well above the equivalent yield for fellow euro zone struggler Italy , which traded at 5.15 percent.
The German Bund future was flat at 138.30 and US Treasury futures were also steady.
DOLLAR TAKES A BREATHER
The dollar index fell to a one-month low of 78.727, also weighed by steep losses against sterling, which hit a 4-1/2 month high amid quarter-end flows expected to be broadly negative for the greenback.
The euro was up 0.3 percent at $1.3337, near a one-month peak of $1.3385 hit earlier this week.