LONDON, Nov 23 (Reuters) - European shares rose and the

single currency hit a three-week high on Friday after progress

was reported in talks to help Greece manage its huge debt and

secure much needed aid payments.

The International Monetary Fund (IMF) and the European Union

are at odds on setting a target for Greece's debt by 2020, and

the two sides are now 10 billion euros ($12.9 billion) apart, a

Greek government official told Reuters.

In the wake of the report the euro rose past $1.29 to hit a

fresh three-week high of $1.2908 in early European trade.

'The market is getting a bit confident that a Greek deal

will be struck, which will remove one of the near-term

uncertainties in the euro zone,' said Paul Robson, currency

strategist at RBS.

Euro zone finance ministers, the International Monetary Fund

and the European Central Bank are due to meet again on Monday to

try to close the gap, which is necessary in order to release

emergency funds for Greece and keep the country afloat.

The potential for a Greek deal and signs lawmakers in the

United States will eventually agree steps to avoid a fiscal

crisis there have been behind a strong rally in share markets

around the world this week.

'Besides Greece, there is a very good chance that we will,

before Christmas, have a deal on averting the U.S. 'fiscal

cliff',' Philippe Gijsels, head of research at BNP Paribas

Fortis Global Markets in Brussels, said.

'These two positive drivers should make for a strong month

of December, which traditionally is a fairly good month

anyway. We remain buyers of the dips and continue to focus on

financials, which will benefit the most from a Greek deal, and

on technology.'

MSCI's world equity index was up 0.2 percent

on Friday at 326.80 points on course for a gain of nearly three

percent this week. That will be best weekly performance since

mid-September.

European stocks opened slightly firmer on the growing

optimism over a Greek deal and are set for their best week in

about 10 months.

The FTSEurofirst 300 was up 0.1 percent at 1,103.93,

although volumes were relatively light due to the half-day

closure of U.S. markets after Thursday's Thanksgiving holiday.

London's FTSE 100, Paris's CAC-40 and

Frankfurt's DAX were also little changed, while U.S.

stock index futures pointed to modest gains when Wall Street

trading resumes for the shortened trading day.

Earlier, MSCI's broadest index of Asia Pacific shares

outside Japan rose 0.7 percent for a weekly gain

of 2.6 percent, its best week for two months.

(Reporting by Richard Hubbard; Editing by Alastair Macdonald)

((richard.hubbard@thomsonreuters.com)(Tel +44 207 5423215))

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