Europe: Stocks advance amid optimism Greek resolution is close

[LONDON] European stocks climbed on optimism a resolution to Greek debt talks is close and that the fallout of a potential exit from the euro would be contained.

The Stoxx Europe 600 Index added 0.4 per cent to 385.59 at the close of trading, paring gains of as much as 1.2 per cent. The equity gauge fell 1 per cent this week. Greece's ASE Index rose 0.6 per cent on Friday, after earlier adding as much as 2.6 per cent as the European Central Bank increased the maximum amount of emergency funding available to Greek lenders. Benchmark indexes of Ireland and Italy rose at least 1.1 per cent for the biggest advances in western-European markets.

The Stoxx 600 reached its lowest level since February on Monday as talks between Greece and its creditors deteriorated. But with fears of contagion easing, the benchmark index of European equities reversed losses on Thursday. Greek stocks account for less than 0.1 per cent of the Stoxx 600.

"Everybody realizes we're getting close to some sort of resolution," said Philippe Gijsels, chief strategy officer at BNP Paribas Fortis in Brussels. "No compromise may mean exit or default, but you have some sort of resolution. Lots of people in the market are ready to buy the dip, and many are buying before the actual event. If you look at Greece, it is a small part of the euro zone. There is some debt, but it is manageable and you also still have the ECB bazooka." Greek Prime Minister Alexis Tsipras said he's confident a deal on his country's finances can be reached at an emergency summit of European leaders on Monday. The European Central Bank held its own emergency session on Friday.

The expiration of some futures and options on stock and indexes, known as quadruple witching, added to market volatility on Friday.

Fifteen of the 19 industry groups in the Stoxx 600 climbed, with travel companies and banks gaining at least 1 per cent.

Colt Group SA jumped 20 per cent after Fidelity offered to buy the shares it doesn't already own in the U.K. business communications provider. Valeo SA climbed 4.2 per cent after the French manufacturer of auto parts announced it bought a 10.5 per cent stake in Aledia, which makes LEDs.

Banco BPI SA fell 9.1 per cent after CaixaBank SA withdrew its offer for the Portuguese lender as its shareholders rejected a key condition. CaixaBank rose 0.8 per cent.

BLOOMBERG