London - European stocks rose on Tuesday on renewed hopes for a Greek debt deal, though gains were capped by weaker-than-expected US data that cast doubt on the strength of the world's biggest economy.
Near-bankrupt Greece struggled on with its foreign lenders on Tuesday to show them it can ram through spending cuts and labor reform in exchange for a crucial debt swap deal and a 130 billion euro bailout package needed to avoid an unruly default.
"People have become more optimistic for a positive outcome (on Greece) and they're now focusing on fundamental corporate and economic data," said Ian King head of international equities at Legal & General, which has 356 billion pounds under management.
"We would need a further uptick in economic indicators to justify the recent move in markets."
The FTSEurofirst 300 index of top European shares rose 0.7% to a provisional close of 1 037.62 points. It gained 3.6% in the month of January.
US home prices fell more steeply than expected in November, and consumer confidence soured in January, highlighting the hurdles still facing the economic recovery.