* MSCI world equity index up 0.1 percent
* European stocks at 17-mth high as Lloyds returns to profit
* Greece worries weigh; euro hits 1-week low vs dollar
* Wall Street set to open slightly higher
By Jessica Mortimer
LONDON, March 19 (Reuters) - European shares rose to a
17-month high on Friday, lifted by gains in banking stocks, but
concerns over Greece's huge debt burden remained, pushing the
euro to a one-week low against the dollar.
The boost to banks came as British lender Lloyds Banking
Group <LLOY.L> said it would swing back to profit this year
after two years of heavy losses, helped by lower bad debts and
tight cost controls. []
The MSCI world equity index <.MIWD00000PUS> was up 0.1
percent, while in Europe the FTSEurofirst 300 index <>
rose 0.5 percent, hitting a 17-month high of 1,076.29.
"The unexpected update from Lloyds has been a welcome relief
and kick-started interest in the banking sector," said Richard
Hunter, head of UK equities at Hargreaves Lansdown.
U.S. stock index futures pointed to a slightly higher
opening on Wall Street, with futures for the S&P 500 <SPc1>, Dow
Jones <DJc1> and Nasdaq 100 <NDc1> up around 0.1 percent.
Some volatility may be expected in the market due to
'quadruple witching' -- the expiration of U.S. stock index
futures, stock index options, stock options and individual stock
futures -- later on Friday.
GREECE WORRIES
Concerns over Greece and doubts over whether euro zone
states will agree any form of support package still weighed on
sentiment, keeping the euro weak and hampering peripheral debt
as traders waited for next week's EU summit.
The euro <EUR=> fell 0.5 percent against the dollar to a
one-week low of $1.3534, while increased risk aversion helped
flows into the U.S. currency. The dollar <.DXY> rose 0.4
percent against a basket of major currencies to 80.571.
"The uncertainty over Greece is definitely weighing on the
euro today. I think the market doubts whether next week's summit
will produce anything more specific in terms of a plan for
Greece," said Chris Turner, head of FX strategy at ING.
The 10-year Greek/German government bond yield spread
widened to 333 bps -- the highest since the start of March --
from 318 bps at Thursday's settlement, according to Tradeweb, on
speculation Greece could call in the International Monetary Fund
if European leaders do not agree on a rescue plan next week.
Markets will be sensitive to further rhetoric on Greece's
debt situation after Athens raised the stakes on Thursday in its
quest for EU help, saying it could not achieve promised deficit
cuts if borrowing costs remained so high. []
Bund futures <FGBLc1> were steady.
Oil prices fell, with U.S. crude oil <CLc1> down 0.5 percent
at $81.68 per barrel, weighed by gains in the U.S. dollar and
and after an industry report suggested OPEC exports were rising.
Gold prices <XAU=> were also pressured by dollar gains,
although traders said Greece's debt problems could still spur
safe-haven buying. Gold traded at $1,122.25 an ounce, down from
$1,125.45 late in New York on Thursday.
(Additional reporting by David Brett and Naomi Tajitsu; Editing
by Susan Fenton)
