G20 officials told Reuters that major central banks stood ready to stabilize financial markets by providing liquidity if the election result causes financial upheaval.

Expectations of more monetary stimulus were also boosted by a British plan to flood its economy with cash, and after economic data in the United States rekindled talk of further easing by the Federal Reserve which holds a policy meeting next week.

The Bank of Japan left its policy unchanged after a two-day meeting but European Central Bank President Mario Draghi signaled a euro zone rate cut was possible and said the ECB stood ready to support the banking system as required.

"Despite some traders pricing in a global deluge of cheap money, today's gains on the open are seen as only modest," said Jonathan Sudaria, a dealer at London Capital Group.

The MSCI world equity index .MIWD00000PUS rose 0.4 percent at 303.49 points and is up more than 1.5 percent for the month so far after a fall of over nine percent in May.

The FTSE Eurofirst 300 .FTEU3 index of top European shares was up 0.6 percent in early trade led by gains in financial stocks.

The euro was little changed at $1.2620, well above a two-year low of $1.2280 hit on June 1, with the market nervous about the impact of the Greek election on the future of the currency bloc.

"Investors will be reluctant to hold any meaningful positions either ways going into the weekend," said Ankita Dudani, G-10 currency strategist at RBS.

IN GREEK HANDS

A strong victory for the anti-bailout far-left SYRIZA party on Sunday would send tremors around the market place. Euro zone leaders have warned Greece that no more funds would be forthcoming if Athens reneges on agreed austerity terms.

More likely is an inconclusive result which leads to days of horse-trading over the formation of a government. There is a good chance that pro-bailout New Democracy takes first place and claims the 50-parliamentary-seat bonus that comes with it.

That would put it in pole position to form the next government, an outcome that could see markets rally and take pressure off Italian and Spanish borrowing costs.

"Such an outcome would initially support the euro, but markets will quickly realize that Greece is still mired in a deep recession and may well need to renegotiate the terms of its bailout, in our view," Morgan Stanley said in a note.

Italian 10-year government bond yields were 12 basis points lower at 6.04 percent, with traders saying market players were covering short positions before the weekend.

Spanish 10-year yields were 9 basis points lower at 6.87 percent, having nudged above 7 percent on Thursday.

Analysts said the likelihood was that there would be no need for a crisis response from central banks on Monday, but Japan's Ministry of Finance said it would act to curb upward pressure on the safe haven yen and there are strong signs that monetary policymakers are ready to respond to a gathering global slowdown in a more measured way.

The British government and Bank of England said on Thursday they would flood Britain's banking system with more than 100 billion pounds, seeking to pump credit through an economy struggling to escape recession under the "black cloud" of the euro zone crisis.

China surprised with a quarter point interest rate cut last week and Draghi noted a series of poor euro zone economic data of late. "There is no inflation risk in any euro area country," he said.

Brent crude futures climbed above $98 per barrel, extending gains on expectations Saudi Arabia would scale back supplies after OPEC kept its output target unchanged, although uncertainty surrounding Europe's debt crisis capped gains.

Gold climbed for a sixth straight session to $1,624, after jobless and inflation data pointed to a slower U.S. recovery, opening the door wider for the Fed to ease further, which would help burnish gold's appeal as an inflation hedge.

Bullion has also seen some safe-haven inflows in recent days due to the rising risk of financial market turmoil in the event of an unruly messy Greek exit from the euro zone bloc.

(Additional reporting by Richard Hubbard, Anirban Nag, William James, Manash Goswami and Rujun Shen. Editing by Elizabeth Piper)

• A Permanent Economic Emergency