The UK's FTSE 100 rose 0.5%, while German and French stocks were also higher. Banks on the continent, which hold much Greek debt, rose - Commerzbank gained 2.4% and Credit Agricole climbed 2.5%.
European banks - including Deutsche Bank and Societe Generale - have been rising on hopes a deal may be reached to keep Greece in the euro.
Germany's Dax and France's Cac indexes rose 2% last week, while Italy's main share index was up 1.1%.
Greece's stock market was also higher. It rose 3.4% last week - its fifth week of gains - on renewed optimism of a bailout. Greek stocks lost 52% of their value last year.
Two bailouts
Athens was first bailed out in 2010 with 109bn euros from the European Union (EU) and the International Monetary Fund (IMF). The Irish Republic and Portugal have also received bailouts.
The eurozone set up a bailout fund to try to contain the crisis from spreading to larger economies such as Italy, and also agreed a second bailout worth 130bn euros last year.
The rescue plan would also write off 100bn euros of debt, with private lenders accepting up to a 70% reduction in what Greece owes them.
In return, they would receive cash and new longer-term bonds.
But the austerity measures demanded by the EU, the IMF and the European Central Bank - Greece's international creditors - have hit the Greek economy hard.
Measures passed by parliament last week set out 3.3bn euros worth of cuts to salaries and pensions, and health and defence spending, which has provoked violence in the streets. And the EU remains sceptical on whether Greece will implement further reforms. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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