London: Global shares edged off 16-month highs yesterday as an unexpected jump in US jobless claims and persistent uncertainty over a solution to Greece's debt crisis tempered optimism over the global economic recovery.
The euro remained pressured and Greek bond yields rose after Athens said it was preparing to activate a financial aid package to be provided by the International Monetary Fund and the European Union.
Forecast-beating earnings from conglomerate General Electric and Bank of America, the largest US bank by assets, helped dispel disappointment felt by some investors over results posted by internet giant Google.
"Clearly both are bellwethers covering a large section of the waterfront in their sectors so if they are seeing better trends, then this should read through to other parts of the economy," said John Haynes, head of research at Rensburg Sheppards.
General Electric, the largest US conglomerate, said it saw "potential for upside" to its earlier forecast of flat 2010 results. Doubts over the strength of the economic recovery lingered after data showing growth in the US manufacturing sector was offset by an unexpected upwards spike in the weekly number of US workers filing new jobless claims.
MSCI's global equity index dipped 0.3 per cent by 1150 GMT though they remained set for their seventh straight weekly gain.
"There's a bit of wait and see ahead of the bulk of US results next week, but the broad outline is that earnings are looking good, with growth stronger than expected in the US," said Steven Bell, director at hedge fund GLC.
The pan-European FTSEurofirst 300 shrugged off earlier weakness to hit its highest in nearly 19 months before gains were capped by weakness in airlines stocks, weighed down by travel paralysis due to the huge ash cloud thrown up by an Icelandic volcano.
Oil languished below $85 a barrel.
The euro retreated against the dollar, snapping a five-day winning streak due to renewed worries over Greece's ability to service its sovereign debt.
Athens lurched closer towards asking for international aid, after it requested official talks with European authorities and the International Monetary Fund (IMF).
European Central Bank president Jean-Claude Trichet told euro zone finance ministers that the situation for Greek banks remains difficult and could deteriorate further.
The cost of insuring Greek sovereign debt rose some 10 basis points from Thursday's close to 428.5, according to CMA DataVision.
Greek 10-year bond yields rose to 7.4 per cent, pushing the 10-year Greek/German government bond yield spread wider.
