* U.S. economy up 5.7 pct in Q4, fastest in 6 years
* Dollar, European stocks and commodities rise
* Newspapers report EU considering Greek bailout
* EU, Greek officials deny any such plans
By Dominic Lau
LONDON, Jan 29 (Reuters) - The dollar gained, U.S. stock
index futures rose and commodity prices firmed on Friday after
the U.S. economy grew stronger-than-expected in the last quarter
of 2009, the quickest pace in more than six years.
The world's largest economy expanded 5.7 percent in the
fourth quarter, as business reduced inventories less
aggressively. []
European stocks also extended gains on the upbeat report,
helping the MSCI All-Country World Index <.MIWD00000PUS> to
trade flat after losses in Asian shares on worries over Greece's
fiscal position, and safe-haven government bonds fell.
"Wow, great number. It's very solid and gives us a running
start into the second half of the year when we can't rely on
government stimulus," said Jack Ablin, chief investment officer
at Harris Private Bank in Chicago.
"That's part of the plan, to get us moving as fast as
possible so when life support is removed we'll have a pulse."
U.S. stock index futures <DJc1> <SPc1> <NDc1> rose further
after the GDP data, up 0.6-1 percent, while the pan-European
FTSEurofirst 300 <> advanced 1.2 percent.
Equities markets were aided by newspaper reports that the
European Union was considering bailing out Greece. But EU and
Greek officials firmly denied the idea.
Greece's benchmark <> put on 2.1 percent.
The Financial Times quoted what it said were high-level EU
officials as saying Greece would as a last resort receive
emergency support from other euro zone governments and the
European Commission.
EU monetary affairs chief Joaquin Almunia said there was no
risk that Greece would default or leave the euro zone and
Finance Minister George Papaconstantinou said Greece was not
involved in bailout talks. []
Markets' suspicion that something was in the works, though,
helped the Greek/German 10-year government bond yield spread
tighten.
The premium investors demand to hold Greek government bonds
rather than benchmark German Bunds narrowed to 374 basis points
from 396 bps in late Thursday trade. The spread blew out to a
record 405 bps on Thursday on investor fears that Athens may not
be able to service its heavy debt.
Financial markets are gripped by the fear Athens will not be
able to service its heavy debt, putting pressure on the euro and
even raising speculation as to whether Greece could be forced
out of the currency bloc.
The dollar <.DXY> was up 0.2 percent against a basket of
major currencies and was up 0.8 percent to 90.62 yen.
The euro <EUR=> eased 0.2 percent to the U.S. currency at
$1.3947. Earlier, the euro hit a six-month low versus the dollar
and a nine-month low towards the yen on concerns over Greece
saga.
Investors have also been nagged this week by fears that the
global economic recovery may be losing momentum, China's steps
to cool its surging economy and political and regulatory
wrangling in Washington.
Overnight the U.S. Senate backed Ben Bernanke for a second
four-year term running the Federal Reserve. []
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
up 3 basis point at 3.668 percent, while those on 10-year Bunds
<EU10YT=RR> were up 1 basis point at 3.209 percent.
Crude prices <CLc1> rose more than 1 percent at $74.60 a
barrel, while copper prices <MCU3> was flat after trading lower
earlier.
(Additional reporting by Lucia Mutikani; Editing by Andy Bruce)
