Markets Rise Amid Optimism Over Deal On Greece

Markets around Europe responded positively after senior European politicians and banking figures said they were hopeful of a solution to the Greece crisis.

Germany's DAX was up 1.4%, France's CAC 40 rose 1.6% and the FTSE was up nearly 60 points by mid morning after Greece said it would offer tax and pension reforms in exchange for a bailout deal.

The Greek government has until the end of Thursday to submit detailed economic measures before it can be in line for a new three-year programme of loans.

Greece's creditors will then review the measures before European leaders meet on Sunday to decide on the country's fate and whether it should stay in the euro.

Speaking at the European Parliament in Strasbourg on Wednesday, Greece's leftist prime minister Alexis Tsipras assured European powers that his government's latest reform plans were "concrete" and "credible".

Greek government spokesman Gabriel Sakellaridis said: "The government is doing everything it can to reach an immediate deal and end this cycle of uncertainty."

It comes as Greece's banks said they have enough cash in their machines to last until Monday.

The banks are to remain closed for the rest of the week, with a €60 (£42) daily limit on cash machine withdrawals also in place until next Monday.

A senior figure at the European Central Bank (ECB) said no more credit should be given to Greek banks unless a bailout deal is achieved.

Bundesbank chief Jens Weidmann said: "It needs to be crystal clear that responsibility for further developments in Greece and for any decisions on transferring financial resources lies with the Greek government and the countries providing assistance, not the ECB governing council.

"Central banks need to show where their limits lie," said Mr Weidmann, who sits on the ECB's governing council.

The ECB is currently keeping Greek banks - and as a result the Greek economy - afloat by using its Emergency Liquidity Assistance (ELA) facility.

Mr Tsipras met with finance ministry officials on Thursday to finalise a plan of reforms for its third bailout.

Greece has submitted a request to the European Stability Mechanism (ESM) - an EU organisation set up to provide financial assistance for eurozone members - for a new loan programme.

Athens has received two international bailouts over the last five years, worth €240bn (£173bn), in exchange for biting austerity measures.

A Reuters source said the proposed reforms would include an increase in corporation tax from 26% to 28%; a rise in VAT on luxury goods from 10% to 13%; a rise in VAT on processed foods, restaurants, transport and some health services offered by the private sector from 13% to 23% and a VAT hike on hotels from 6.5% to 13%.

Greek islands would continue to enjoy a lower rate of VAT, the source claimed.

EU Economics Commissioner Pierre Moscovici was among those who said he was hopeful that a new Greek bailout deal is possible.

"I have the sense that the dialogue is established, or restored, and that there is a way out," he said.

European Council president Donald Tusk - who described Sunday's meeting as Greece's "final deadline" - called on the country's creditors to make a "realistic" debt proposal in order to help make a rescue deal possible.

The rise in optimism also came after US Treasury Secretary Jack Lew argued that debt relief was needed for a deal, describing an exit from the euro for Greece as a "geopolitical mistake".