* Economic optimism countered by worries about China-U.S. tensions * Euro/dollar lowest since Nov on divergent COVID outlooks * Oil settles as efforts to refloat beached Suez tanker continue * Turkey’s lira set for worst week since 2018 after cbank sacking Stock markets and the dollar zig-zagged higher on Friday, as hopes for economic recovery and the week’s easing of global bond market yields offset the stresses of the world’s most expense traffic jam. As the last full week of a hectic first quarter drew to a close, traders were watching desperate efforts to free a beached supertanker in one of the world’s most vital trade arteries, the Suez canal, as well as the rising global COVID-19 case count. Chinese markets had helped Asia rebound from a 3-month low overnight by overcoming their latest U.S. relationship worries, while a near 3% jump in commodity stocks, a weaker euro and upbeat German data kept Europe on course for a fourth straight weekly rise. Wall Street was expected to edge higher at the opening. Bond yields were also slightly up on the day, but 10-year Treasuries were on track for their biggest weekly yield drop since June. For German bunds it was 3-1/2 months, as the euro zone’s coronavirus woes support safe-haven assets there. The euro’s struggles are part of that too but the dollar bulls were firmly in charge with the U.S. vaccine programme ramping up. The greenback’s 0.3% rise on Friday meant it had clawed back almost all of its post-U.S. election fall. Emerging markets currencies in contrast have had their worst run of the year this week, not helped by a near 10% plunge in Turkey’s lira after another central bank governor sacking. “We left 2020 with the validation of the consensus view the dollar would weaken,” said Vincent Manuel, chief investment officer at Indosuez Wealth Management. “We have woken up in 2021 facing the reality that the U.S. is growing much quicker than Europe... so we have a massive divergence”. Weekly money flow data from Bank of America showed global investors have been darting for safety amid this week’s drama. They pumped $45.6 billion into cash funds, the largest since April 2020 when COVID-19 was spreading fast. The end of the week news flow has been slightly more friendly though. Business morale in Europe’s biggest economy Germany is back to its best in almost two years thanks to recovering global demand for manufactured goods, data on Friday showed. U.S. Labor Department figures on Thursday had seen U.S. unemployment benefit claims drop to a one-year low, while President Joe Biden doubled his near-term target for U.S. vaccinations to 200 million shots in his first formal news conference as president. “We now expect that the U.S. dollar will strengthen somewhat over the next couple of years as the U.S. economy outperforms,” analysts at Capital Economics said as they lifted their greenback forecasts. BLOCKED SUEZ Turkey’s markets were struggling to settle after the lira’s near 10% slump triggered by President Tayyip Erdogan’s latest central bank chief sacking, which has raised worries about a full-blown crisis that would require capital controls. “If you can’t raise rates and you don’t have sufficient reserves, then you don’t have any other choice if you want to limit exchange rate depreciation,” Morgan Stanley’s chief economic advisor and former head of the IMF’s European department, Reza Moghadam, said. Blue chip Chinese stocks rebounded more than 2% though after a three-day losing streak, which, like emerging market shares generally, had left them at the lowest level of the year. “All the sanctions (on China) so far have been largely symbolic and should have little economic impact. But the Sino-U.S. confrontation is affecting market sentiment. It could take some time for them to come to any compromise,” said Yasutada Suzuki, head of emerging market investment at Sumitomo Mitsui Bank. The dollar also rose to a new nine-month high against the Japanese yen of 109.44 yen. The euro licked its wounds at $1.1794 after falling to a four-month low on Thursday. The ongoing efforts to dislodge the tanker in the Suez canal saw oil prices rebound a tad from a 4% drop on Thursday, though they are on course for their third straight week of losses on worries about further reduction in demand. In addition to Europe, major developing economies such as Brazil and India are also struggling with a resurgence in COVID-19 cases. Brent was at $62.62, up 1.08%, U.S. crude was last up 1.33% at $59.35 per barrel, gold was flat and copper, though more than 1% higher on the day, was still in its $8,600 - $9,200 a tonne recent range. Reeling from the blockage in the Suez, shipping rates for oil product tankers have nearly doubled this week, and several vessels were diverted away from the vital waterway.