(MENAFN- AFP) Europe's main stock markets closed mostly up on Wednesday, buoyed by hopes that Greece's creditors will throw it a "lifeline" to ease its debt crisis and help it avoid a painful eurozone exit.
Frankfurt's DAX 30 index finished up 0.60 percent at 10,961 points, while in Paris the CAC 40 closed 0.95 percent higher at 4,799.03 points.
London's benchmark FTSE 100 index closed flat at 6,898.08 points after reaching 15-year highs earlier in the day on news that Athens would seek an extension to its bailout.
Athens' main shares index gained 1.05 percent to close at 847.53 points, having earlier surged by more than 3.0 percent.
In foreign exchange activity, the euro fell to $1.1352 from $1.1413 late in New York.
Athens appeared Wednesday to be nearing a deal with EU officials on extending its loan agreement to allow time to renegotiate the conditions of its massive debt to give the country more room to restore economic growth.
Athens will send a letter to Jeroen Dijsselbloem, head of the Eurogroup, on Thursday to request an extension on its European loan agreement that would sidestep the duties of a full-blown bailout, a government source said.
Europe and Greece are racing to reach a deal to prevent Greece from crashing out of the eurozone, after talks in Brussels ended in acrimony on Monday.
The European portion of the 240-billion-euro ($270 billion) bailout expires at the end of February and Greece's creditors insist it needs extra financing to stave off the risk of a default and a eurozone exit.
"There is optimism that permission will be granted by Greece's EU creditors to extend its loan program beyond February and keep the country from defaulting and falling out of the eurozone," said Jasper Lawler, an analyst at CMC Markets UK.
- 'Lifeline' -
Greek voters mandated the new radical left government to "undo austerity measures imposed in the existing programme," he said. "To extend the bailout programme after just a few weeks in power would be politically untenable for Greeks."
IG analyst David Madden agreed, saying: "There is a feeling that a lifeline will be cast out."
But the Fitch ratings agency warned of long-term risks. "The damage to investor, consumer and depositor confidence is increasing downside risks to growth and Greece's incipient economic recovery," it said.
"It may take time to repair even if agreement with official creditors is reached in the coming days or weeks."
Meanwhile US stocks opened lower Wednesday following mixed US housing data and a lacklustre reading on inflation.
About 30 minutes into trade, the Dow Jones Industrial Average was at 18,005.36, down 0.23 percent.
The broad-based S&P 500 fell 0.26 percent to 2,094.82, while the tech-rich Nasdaq Composite Index shed 0.08 percent to 4,895.15.
The Federal Reserve was to release minutes from its January meeting later Wednesday that are expected to be scrutinised for clues on when the central bank will raise interest rates.
Back in London, the British pound soared to a seven-year pinnacle against the European single currency on the back of upbeat jobless data.
Britain's unemployment rate has descended to a new six-year low of 5.7 percent while growth in wages outpaced inflation, official data showed Wednesday.
In reaction, the euro sank to 73.55 pence, having reached 73.50 pence -- the lowest level since January 2, 2008 -- down from 74.34 pence on Friday. The pound meanwhile rose to $1.5434 from $1.5352.
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