World stocks bounced sharply higher on Monday as a raft of U.S. data showed economic recovery was gathering strength, but investors remained wary over Greece's debt bailout plans.

The euro was steady but Greek-German bond spreads widened following last Friday's decision by the Greek government to turn to its European Union partners and the International Monetary Fund for help.

Greece's finance minister said on Sunday emergency aid would arrive in time to avert it defaulting on its debt, although signs were growing that a 45 billion euro ($60 billion) rescue would have to be bigger.

World stocks as measured by MSCI were up 0.7 percent. The pan-European FTSEurofirst 300 <.FTEU3> gained 1.4 percent and Japan's Nikkei <.N225> closed 2.3 percent higher.

In addition to the tentative easing of concern about Greece, investors were buoyed by solid improvement in U.S. economic data on Friday.

New U.S. home sales rose at their fastest pace in 47 years in March and new orders for durable goods grew strongly, helping U.S. stocks to a 19-month high.

There does seem to be a lessening in risk aversion after Wall Street's performance on Friday, but whether this is sustainable remains to be seen, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

It appears that Greece is getting aid, but whether this is the ultimate solution is a big question.

STEADY EURO

The euro held steady after dipping to a one-year low late last week.

The market is looking for any fresh news in regards to Greece; we will only get a positive reaction if we get some firm details but that may take some time, said Christian Lawrence, currency strategist at RBC Capital Markets.

Data on Friday showed currency speculators had boosted net short euro positions in the week ended April 20.

The euro was flat on the day at $1.3385, having risen as far as $1.3397, according to Reuters data. It had hit a low of $1.3199 on Friday, its lowest since early April last year.

The dollar was flat against a basket of major currencies <.DXY>.

On fixed income markets, the spread between Greek and German 10-year bond yields moved out above 600 basis points again after narrowing to 588 bps on Friday.

The 10-year German bond yield was down slightly at 3.049 percent and the two-year Schatz yield was down 3 basis points at 0.902 percent.

(Additional reporting by Tamawa Desai; Editing by Toby Chopra)

Japan Nikkei 225