The brightening economic outlook in the United States, as new-home sales shot up 27 percent in March, and the diminishing fears of an acute debt crisis in Europe drove down US Treasury debt prices as investors curbed their bid for safety.

Greek Prime Minister George Papandreou asked to activate a 45 billion euro EU/International Monetary Fund bailout package.

And Germany's finance minister later said that Germany was ready to contribute to an aid package for Greece, which reassured investors who had been unsettled by Germany's initial reluctance to make any commitment to bail out Greece.

There was skepticism, however, about the longer-term prospects for Greece.

The uncertainty limited gains in the euro, which rebounded after earlier sinking to a one-year low of $1.3202.

With liquidity in Greek bonds practically dried up and the yield on a two-year Greek paper soaring, market players had predicted that the debt-ridden country had little alternative to seeking financial aid. Two-year Greek yields, after topping 12 percent on Thursday, declined to about 10.5 percent on Friday. The yield started the year near 4 percent.

The news on Greece helped drive up trading on Wall Street, but gains were kept in check as shares of Microsoft Corp fell after its quarterly results disappointed investors.

The Dow Jones Industrial Average rose 10.66 points, or 0.10 percent, to 11,144.95. The Standard & Poor's 500 Index was little changed at 1,208.72 and the Nasdaq Composite Index lost 5.11 points, or 0.20 percent, to 2,513.96.

World stocks as measured by MSCI rose 0.19 percent.

In Europe, the FTSEurofirst 300 index of top European shares closed up 0.8 percent at 1,092.24 points, rebounding from a three-week closing low on Thursday.

Banks were among the biggest gainers as the concerns over Greece eased.

European shares were also boosted by a much better-than-expected German business sentiment survey from Munich-based think tank Ifo, which climbed to 101.6 from an upwardly revised 98.2 in March.

Shares in Volvo, the world's No. 2 truck maker, soared more than 10 percent after its first-quarter profit beat expectations. Ericsson, the maker of mobile telecom gear, rose 8.2 percent on strong margin growth.

The battered euro rose for the first day in seven amid confidence that the financial aid package for Greece would help stanch the crisis that has gripped the nation this year.

The euro's rebound lost steam as analysts said tapping the aid mechanism was not likely to solve Greece's longer-term problems in tackling its budget deficit. Investors sought clarity and details on how the loan would be disbursed.

The euro rose 0.58 percent to 1.3367. Against the Japanese yen, the dollar rose 0.78 percent to 94.15, and the US Dollar Index declined 0.10 percent to 81.486.

US Treasury debt prices fell after reports pointed to stronger economic growth. In addition to home sales, US non-defense capital orders excluding aircraft - a gauge of business investment - grew in March.

Yields on benchmark 10-year Treasury notes rose 0.05 percentage point to 3.82 percent.

Meanwhile, oil prices have risen above $84, helped slightly by strong sales of new US homes that surged last month from a record low in February.

Benchmark crude for June delivery rose 73 cents to $84.43 a barrel in midday trading on the New York Mercantile Exchange.

In other Nymex trading in May contracts, heating oil rose 2.20 cents to $2.2370 a gallon and gasoline gained 2.43 cents at $2.3245 a gallon. Natural gas rose 4.3 cents to $4.171 per 1,000 cubic feet.

In London, Brent crude advanced 96 cents to $86.63 on the ICE Futures exchange.