Greek deal hopes boost Europe’s stock markets

European stock markets moved firmly higher on Wednesday, boosted by reports that Greece will ask for an extension to its loan agreement later in the day.

Greek progress: Sentiment in Europe was lifted by hopes that Greece and its international creditors were getting closer to a debt agreement that will keep the country financially afloat when the current bailout program expires on Feb. 28.

The terms of the proposed deal are reportedly still under negotiation. But Germany has already indicated that it won’t accept a mere loan agreement without a formal extension of the bailout program, including the strict austerity conditions attached.

If Greece doesn’t get some sort of loan or program extension before the end of the month, the country risks running out of money and defaulting on its debt. A meeting of eurozone finance ministers — the Eurogroup — broke down abruptly on Monday, underscoring how far apart the two sides are in negotiating a deal.

“The Greek government is proposing to reverse reforms, which is completely unacceptable for parliaments in Berlin, Den Haag or Amsterdam. We are still far away from a deal, and the risk of ‘Grexit’ remains elevated, at 35%,” said Christian Schulz, senior economist at Berenberg, in emailed comments on Wednesday.

Concerns have risen that Greece may withdraw from the eurozone — a “Grexit” — if the country’s new anti-austerity government is unable to come to an agreement with its international lenders.

The European Central Bank will on Wednesday review the emergency liquidity assistance granted to Greek banks, and economists largely expect the funding line to remain open.

Other European markets: The U.K.’s FTSE 100 index UKX, +0.09% added 0.2% to 6,910.28, on track for its highest close since 1999. U.K. unemployment data and minutes from the latest Bank of England meeting are due later in the day.