World equities extended their relief rally into a fourth day on Friday on optimism over global economic growth, while the euro steadied as it ran into headwinds above $1.21 after three days of gains.

Commodity prices eased, also snapping three days on the up, though crude prices held above $75 a barrel.

Investors remained optimistic about China's growth, even though fresh data showed inflation in the world's third-largest economy quickened to a 19-month high in May while its factory output and capital spending moderated.

On Thursday, Beijing announced a sharp jump in May exports, boosting investors' confidence about its economy's strength as Europe grapples with a sovereign debt problem.

A string of successful government bond sales from the likes of Belgium, Portugal and Spain this week has also eased immediate concerns about funding problems for euro zone peripheral countries. Italy comes to the market later on Friday.

World stocks measured by the MSCI All-Country World Index <.MIWD00000PUS> advanced 0.4 percent, helped by a 1.7-percent rise in Tokyo's Nikkei average <.N225>.

The World Index has gained 1.5 percent this week but is still down 7.7 percent this year.

Europe should have a bit of a spring this morning following on from the Far East, said Justin Urquhart Stewart, director at Seven Investment Management.

The pan-European FTSEurofirst 300 <.FTEU3> put on 0.4 percent and the Thomson Reuters Peripheral Eurozone Countries Index <.TRXFLDPIPU> added 0.5 percent.

EURO STEADY

The euro steadied at $1.2110 after a three-day rebound. Its climb petered out around $1.2150, where options were due to expire later in the day.

That level also provided technical resistance as the $1.2140-1.2160 region had provided support during the euro's downward move in May.

German government bonds struggled to make any headway after two sessions of steep falls as investors positioned for up to 7 billion euros ($8.5 billion) of Italian debt supply.

We've seen positive risk sentiment in Asia continuing and this has also spread into the European session so far, said Michael Leister, strategist at WestLB.

The market is waiting for the results of the Italian auction. If this goes well, the relief sentiment we've seen over the past couple of sessions now will continue.

The two-year Schatz yield climbed 1 basis point to 0.529 percent, while the 10-year Bund yielded 2.635 percent, up 1.7 basis points.

Results for the Italian debt auction are due at 0900 GMT.

Crude eased 0.5 percent but held above $75 a barrel, while copper dipped 0.2 percent after three-day of rises. (Additional reporting by Ian Chua, Joanne Frearson and Naomi Tajitsu, editing by Mike Peacock)

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