Greek deal optimism pushes European shares to 7-year high

* FTSEurofirst 300 up 0.4 pct, sets fresh 7-yr high

* Greek shares lead gains as Athens seen asking for loan extension

* Agricole rallies after profit beat

By Francesco Canepa

LONDON, Feb 18 (Reuters) - Greek stocks helped push a key pan-European share index to a seven-year high on Wednesday on fresh optimism that Athens would reach an agreement with its international lenders.

Greek stocks rose 3 percent after a source close to the government said Greece intends to ask on Wednesday for an extension for up to six months of a loan agreement with the euro zone, on conditions to be negotiated. A Greek government spokesman later confirmed the move.

Shares (Frankfurt: DI6.F - news) in Italy and Spain, heavily indebted countries that are seen as coming under market pressure if Greece were to leave the euro zone, outperformed. Italy's FTSE MIB was up 0.9 percent and Spain's Ibex rose 0.7 percent.

"Everyone is buying the ones that are most affected," Mike Reuter, a trader at Tradition, said.

The pan-European FTSEurofirst 300 index rose 0.4 percent to 1,510.75 points, having set a fresh seven-year high at 1,512.63 points in early deals.

Providing further support to the FTSE MIB, shares in oil and gas group Eni (LSE: 0N9S.L - news) rose 3.4 percent after the Italian company said it would pay a cash dividend even after a sharp fall in oil prices hit net profit in the fourth quarter of last year.

Adding to the positive sentiment in the oil sector, French oil services group Technip (LSE: 0IEB.L - news) said it would raise dividends by 8 percent and posted a 20.6 percent rise in adjusted core profit for the fourth quarter as an increase in orders helped it defy the sector slowdown.

Europe bourses in 2015: http://link.reuters.com/pap87v

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up

BANKS RALLY

Banks received a boost after results from France's Credit Agricole beat forecasts. The bank's shares were up 4.1 percent.

Around 58 percent of European companies that have reported so far have met or beaten consensus forecasts, although financial firms have lagged, with 52 percent of them falling short of expectations, StarMine data showed.

Smaller Italian lenders also surged on speculation about possible merger activity. Daily Il Messaggero said in an unsourced report that Banca Popolare di Milano (Milan: PMI.MI - news) could tie up with smaller rival Banca Popolare dell'Emilia Romagna , sending shares in the latter up 3.5 percent. Shares of Banca Popolare di Milano were up 2.5 percent. (Editing by Susan Fenton)