World stocks rose on Friday, aided by upbeat economic data from Japan and expectations for solid corporate results, while two-year euro zone yields hit record lows as investors wary of the Greek debt crisis sought safety.

The euro held just above last week's 9-month low as investors remained jittery about the potential impact on Greece from a possible further downgrade in the country's credit rating as Athens prepared to borrow more in the next few weeks.

Japan's industrial output rose a higher-than-expected 2.5 percent in January.

The main thing driving the market higher was Asian data overnight, said Bernard McAlinden, investment strategist at NCB Stockbrokers, in Dublin.

The worry is that the economy will double dip, though we've got confirmation all round that interest rates will stay low.

The MSCI world equity index <.MIWD00000PUS> rose half a percent while the FTSEurofirst 300 index <.FTEU3> rose 0.7 percent, with resource shares <.SXPP> leading the move higher.

According to Thomson Reuters data, the quarterly earnings growth rate for S&P 500 firms stood at 214 percent in the fourth quarter, after contracting 14.7 percent in the previous three months.

The growth rate is expected to remain solid at 37 percent in the first quarter and double-digit expansion is set to continue toward the final quarter of 2004.

Emerging stocks <.MSCIEF> gained 0.8 percent.

U.S. crude oil slipped 0.14 percent to $78.06 a barrel.

Bund futures were steady while two-year euro zone government bond yields hit a record low of 0.825 percent. The premium investors demand to hold 10-year Greek debt rather than German bunds rose to 357 basis points.

The dollar <.DXY> lost 0.15 percent against a basket of major currencies while the euro was up 0.2 percent $1.3573, just above last week's low around $1.3442.

Economic stress in the euro zone is currently keeping demand for euro-denominated assets low. Global investors continue to reallocate funds away from the euro zone and put a floor under the dollar. We expect growth differentials, rate expectations, and the capital flow situation to remain in favor of the dollar against the euro, UBS said in a note to clients.

(Editing by John Stonestreet)

Japan Fall