[FRANKFURT] European stocks advanced amid investor optimism that Greece and its creditors can work out a bailout deal and keep the Mediterranean nation in the euro area.
The Stoxx Europe 600 Index rose 1.5 per cent to 387.07 at the close of trading. It earlier climbed as much as 2.2 per cent after Greek Prime Minister Alexis Tsipras signaled he's prepared to compromise on the starting point for talks. Shares trimmed gains after he reiterated his call for voters to reject austerity measures in Sunday's referendum.
Greece has already missed a US$1.7-billion payment to the International Monetary Fund, after previous proposals to creditors were rebuffed.
"It seems they are on their way towards some type of a deal," said Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich. "It's a first step, and if they decide there is room for negotiation, the markets will stay up. One per cent of the advance is just a rebound from previous days' losses and the rest because of this new proposal. Ultimately, Greece will stay in the euro."
Three days of capital controls, rationing pensions and the expiry of its bailout pushed the Greek government to say it's willing to accept creditors' latest offer as a basis for compromise. Sunday's referendum remains a stumbling block, along with disagreements over pensions, spending and taxes. Mr Tsipras called for voters to reject austerity measures to help strengthen the government's negotiating position.
Auto-related companies posted the biggest increase of the 19 industry groups on the Stoxx 600, with Daimler AG and Volkswagen AG contributing most to the advance with gains of at least 3 per cent.
Among stocks moving on corporate news, Airbus Group SE rose 3.7 per cent after winning an order from China for as many as 75 A330 jets worth US$18 billion at list prices.
Serco Group Plc jumped 6.5 per cent after saying that trading in the year to date has been better than anticipated.
Commerzbank AG advanced 2.7 per cent after selling 2.9 billion euros of commercial real estate loans to Oaktree Capital Group LLC and JPMorgan Chase & Co.
Osram Licht AG climbed 6.7 per cent after Reuters reported that it is in talks with potential buyers regarding the sale of its lamps unit.