The Japanese yen strengthened against most major currencies in the early European session on Friday amid risk aversion, as European shares fell amid mixed signals over the status of Greece's debt talks and surprisingly unguarded remarks by IMF chief Christine Lagarde that a Greek exit would not signify an end to the single currency.

The U.K.'s FTSE 100 index is currently down 0.15 percent or 10.78 points at 7,030, France's CAC 40 index is down 0.48 percent or 24.71 points at 5,113 and Germany's DAX is down 0.81 percent or 95.17 points at 11,582.

In an interview with German newspaper, Lagarde said a deal with Athens was unlikely to be reached over the next few days, and Greece's exit from the Eurozone is a possibility.

However, a government spokesman reportedly said that Greece aims to strike a rescue deal with its international creditors by Sunday to avoid a default or bankruptcy.

Investors also look forward to the release of first quarter GDP data due out later in the day, for clues on the timing of a Federal Reserve interest rate increase.

The outcome of a meeting of G7 finance ministers in Dresden today could shed more light on how Greece's international creditors seek to end the impasse.

In other economic news, data from the Ministry of Internal Affairs and Communications showed that Japan's consumer price index were up 0.6 percent on year in April, slower than the previous month's 2.3 growth. On a monthly basis, overall CPI were up 0.4 percent and core inflation rose 0.3 percent.

Data from the Ministry of Economy, Trade and Industry showed Japan industrial production climbed a seasonally adjusted 1.0 percent month-over-month in April, in line with expectations, reversing a 0.8 percent fall in March. It was the first increase in three months.

On an annual basis, industrial output edged down 0.1 percent in April, much slower than previous month's 1.7 percent decrease. The figure was also matched with consensus estimate.

Data from the Ministry of Land, Infrastructure, Transport and Tourism showed that Japan's housing starts grew 0.4 percent year-on-year in April, but slower than the 0.7 percent increase seen a month ago. Nonetheless, the annual growth exceeded a 0.2 percent rise forecast by economists. This was the second consecutive rise in housing starts. The number of construction orders received by big 50 contractors declined 12.1 percent from last year, reversing March's 8.2 percent increase.

In the Asian session today, the yen held steady against its major rivals.

In the European trading now, the yen rose to 135.42 against the euro, from an early 135.42 near 2-week low of 135.90. If the yen extends its uptrend, it is likely to find resistance around the 132.50 area.

The yen advanced to a 3-day low of 189.17 against the pound, from an early lows of 189.99. On the upside, 185.00 is seen as the next resistance level for the yen.

Against the Swiss franc, the yen edged up to 130.75 from an early low of 189.99. The yen may test resistance near the 127.50 region.

Looking ahead, the first quarter Canada GDP data, second estimate of U.S. GDP data for first quarter and University of Michigan's final consumer sentiment index for May are due to be released in the New York session.

At 7:00 am ET, European Central Bank board member Yves Mersch speaks at the Bulgarian Authorities 2015 IMF/World Bank Constituency Meetings, in Sofia, Bulgaria.

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