By Sara Sjolin, MarketWatch

Greece to submit loan-extension request on Thursday

LONDON (MarketWatch) -- European stock markets moved firmly higher on Wednesday, boosted by reports that Greece will ask for an extension to its loan agreement later this week.

The Stoxx Europe 600 index picked up 0.8% to 379.83, setting it on track for the highest level since November 2007. Greece's Athex Composite index added 0.9% to 845.42, reversing after a 2.5% slide on Tuesday. Greek banks rallied, with shares of Piraeus Bank SA up 4.9%, Eurobank Ergasias SA rising 4.8% and National Bank of Greece SA 5.9% higher.

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

Spokesman Gabriel Sakellarides said the Greek government was preparing to submit a request for an up to six-month extension to its loan agreement on Thursday, a day later than what was initially reported. So far, Greece only wants a new loan deal and is not looking for a continuation of the full bailout program, arguing that the attached conditions are hurting the country's economy and society.

Germany has already indicated that it won't accept a loan agreement without a formal extension of the bailout program, including the strict austerity terms. Eurozone finance ministers have tentatively scheduled a meeting on Friday to discuss Greece's debt deal, but will only meet if Greece has submitted a "credibly worded request" for an extension, according to a European official.

Meanwhile, Greece's minister of state Alekos Flamboraris reportedly said the government might ask for an emergency EU summit to be held as the Greek crisis is as much a political as an economic issue.

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.

"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 if the country's new antiausterity 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 fell 0.2% to 6,883.94. The benchmark had traded as high as 6,921.32 earlier in the day, but the gains were dented and eventually erased by hawkish minutes from the Bank of England's February meeting as well as solid labor-market data. A drop in the unemployment rate and rise in salaries will provide the BOE with more ammunition to eventually raise interest rates, which isn't well-received by stock investors.

The pound (GBPUSD), on the other hand, rose to $1.5430, up from $1.5354 late Tuesday.

France's CAC 40 index climbed 0.8% to 4,794.16, while Germany's DAX 30 index gained 0.4% to 10,942.63.

Movers: Shares of Peugeot SA rose 6.1% after the French car maker said it narrowed its loss in 2014, boosted by strong sales in China and cost cutting.

Credit Agricole SA jumped 7.3% after reporting better-than-expected fourth-quarter earnings. The French bank also said it would name its new CEO next week.

Accor SA gained 2.1% after the hotel group said profit rose 77% last year.

Carlsberg AS (CABJY) fell 1.7% after the Danish brewer reported a sharp drop in profit in the fourth quarter.

Swedish Match AB fell to the bottom of the Stoxx 600, down 5.2% after the tobacco company reported full-year earnings.

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