By David Gaffen
NEW YORK (Reuters) - The euro stabilized in volatile trading and stocks rose on Wednesday after reports that Greece and its creditors, including the European Union and IMF, had reached an agreement that will provide debt relief to the struggling nation.
The agreement between Greece and the Brussels Group, comprised of major creditors that include the EU and International Monetary Fund, will include no more wage or pension cuts to help get more aid for the nation, which is in danger of missing debt payments.
That helped boost the euro against the dollar, and pushed European shares higher late in their session. U.S. equity markets also rallied modestly, recovering some of Tuesday's losses.
The dollar had hit a fresh eight-year high against the yen but gave up gains against the euro, with the single currency lately at $1.0888, up 0.1 percent on the day.
Sources close to the lenders have so far not indicated enough progress to warrant drawing up any kind of agreement, however. Greece and its European creditors have played down fears that Athens would default on a payment to the IMF next week. The country is due to pay the IMF 1.6 billion euros in June over four installments.
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The benchmark 10-year Greek government bond saw its yield decline sharply, falling to 11.53 percent from 11.89 percent a day earlier.
The FTSEuroFirst 300 leading index of 300 top European shares was up 1.2 percent to 1621.74 and Britain's FTSE rose 1.3 percent to 7037. France's CAC was up 1.9 percent at 5178.21 and Germany's DAX was up 1.1 percent to 11751.61.
The Dow Jones industrial average rose 88.48 points, or 0.49 percent, to 18,130.02, the S&P 500 gained 10.3 points, or 0.49 percent, to 2,114.5 and the Nasdaq Composite added 36.71 points, or 0.73 percent, to 5,069.46.
In bond markets, the 10-year German Bund yield rose two basis points to 0.56 percent, while the 10-year U.S. Treasury yield was up four basis points at 2.17 percent.
After tumbling nearly 3 percent on Tuesday, U.S. crude recovered some ground before giving up those gains. It was last down 0.3 percent at $57.88 a barrel, while Brent fell 1.5 percent to $62.74 a barrel.
Gold gave up earlier gains and was last down 1.4 percent at $1,187 an ounce.
(Additional reporting by Anirban Nag in London; Editing by Mark Heinrich and Nick Zieminski; To read Reuters Global Investing Blog click on https://bsmedia.business-standard.comblogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)