* World stocks rise on hopes of a bailout for Greece
* Greece's borrowing costs ease
* Euro relinquishes the previous day's gains
By Dominic Lau
LONDON, Feb 10 (Reuters) - World stocks rose on Wednesday
and Greece's borrowing costs fell on the prospects of a Greek
bailout, while safe-haven German government bond prices dipped
and the euro eased after the previous session's hefty gains.
Oil prices fell after data showed a large build in U.S.
inventories but gold prices were flat, taking a pause from
Tuesday's rise.
World equities measured in MSCI All-Country World Index
<.MIWD00000PUS> rose 0.4 percent, with the pan-European
FTSEurofirst 300 <> index rising 0.7 percent and Athens'
benchmark <> up 4 percent.
In Asia, Japan's Nikkei average <> put on 0.3 percent.
A senior German coalition source said on Tuesday that
European governments have agreed in principle to help heavily
indebted Greece. However, a German government spokesman said a
decision had not yet been reached. []
European Union leaders are set to hold a special summit on
the economy on Thursday.
The news also boosted the appeal for lower-rated euro zone
government bonds, with the premia investors demand to hold them
easing.
The Greek/German 10-year government bond yield spread
narrowed 44 basis points to 276 bps -- its tightest in three
weeks, and the cost of insuring against a sovereign debt default
by Greece, Spain, Portugal and Italy dropped.
Some analysts said the effort to help Greece by European
countries was positive for the financial markets, but Athens
needed to take action to fix its financial problems.
"It's highly unlikely that there will be any decisive
bailout in the form of debt guarantees for Greece or any of the
other peripheral economies. The onus is still very much on the
Greeks to make necessary adjustments," said Bernard McAlinden,
investment strategist at NCB Stockbrokers in Dublin.
The country's public sector workers will strike on Wednesday
in the first major test of Athens' commitment to push through
austerity plans and tackle the debt crisis.
Concerns over Greece's fiscal problems as well as other
peripheral euro zone countries, such as Portugal and Spain, have
pressured the financial markets for weeks.
EURO SLIPS
The euro <EUR=> eased 0.2 percent against the dollar at
$1.3756 after gaining 1 percent on Tuesday.
Analysts said the currency market was anticipating the
outcome of the EU summit on Thursday to see whether a concrete
plan for Greece would materialise, and that the euro may benefit
if periphery bond spreads contract more.
"The market will be very volatile, depending on if there is
a package and if so, what that will be and how the market thinks
it will impact the narrowing of spreads," said Marcus Hettinger,
global currency strategist at Credit Suisse in Zurich.
"If the recent widening of the periphery spreads stops or if
they narrow, that should be positive for the euro given the
market is extremely short (on the currency)."
Yields on benchmark 10-year Bunds <EU10YT=RR> were up 3
basis points at 3.226 percent, while those on 10-year U.S.
Treasuries <US10YT=RR> were steady at 3.637 percent.
In commodity, oil prices <CLc1> eased to trade around $73 a
barrel after data showed a large build in U.S. crude stocks,
signalling persistently weak demand in the world's top energy
consumer.
Meanwhile,ArcelorMittal <ISPA.AS>, the world's top
steelmaker, cautioned its markets would only recover slowly as
it forecast higher shipments but lower selling prices in the
early months of 2010. []
(Additonal reporting by Atul Prakash, Emelia Sithole-Matarise
and Naomi Tajitsu in London; Editing by Andy Bruce)
