European stock markets rose for a second day running on Tuesday and the euro hit $1.30 on improved sentiment about Greece and amid mixed news for Spain, traders said.
London's benchmark FTSE 100 index of top companies climbed 0.52 percent to 5,805.66 points in late morning deals, as dealers digested news of a drop in Britain's annual inflation rate to a near three-year low level.
Frankfurt's DAX 30 grew 0.66 percent to 7,309.53 points, as data showed that investor sentiment in Germany rose for the second month in a row during October.
In Paris, the CAC 40 advanced 0.52 percent to 3,437.95 points, while Madrid's IBEX 35 index gained 1.23 percent to 7,772.80.
"The mood is positive in Europe today after Greek prime minister Antonis Samaras said he is confident that Greece will receive the next tranche of its bailout," said David Madden, market analyst at IG trading group.
"Greek borrowing costs have fallen as traders are less fearful of a default."
Greece raised 1.625 billion euros ($2.1 billion) in an auction of three-month treasury bills on Tuesday at a reduced rate of 4.24 percent, the public debt management agency said.
Having been shut out of the long-term debt markets since 2010, Greece relies on EU-IMF rescue loans to keep its economy afloat and regularly issues short-term debt.
The heavily indebted eurozone country is currently in talks with auditors representing its EU, International Monetary Fund and European Central Bank creditors, trying to finalise an austerity package amounting to approximately 13.5 billion euros.
Approval of the package will unlock a 31.5-billion-euro instalment from the rescue loans, much needed to recapitalise banks and pay outstanding domestic debts.
In foreign exchange trading on Tuesday, the euro grew to $1.30 from $1.2950 late in New York on Monday. Gold prices advanced to $1,740.88 an ounce on the London Bullion Market from $1,736 an ounce on Monday.
"On-going optimism that Spain will request EU (bailout) assistance at some point should keep the euro supported against the dollar," said Lloyds Bank analyst Adrian Schmidt.
Borrowing costs for eurozone member Spain also eased on Tuesday when it raised 4.86 billion euros in a sale of 12- and 18-month debt, a key test of confidence amid warnings the country may need bailing out.
The sale came as Standard & Poor's cut the credit ratings of seven Spanish banks including the two largest, Santander and BBVA, after having downgraded Spain's sovereign debt.
But dealers took the news in their stride, with banking shares rising across Europe and Santander's stock price up 1.98 percent at 5.924 euros.
Asian stock markets closed higher on Tuesday in response to a strong showing on Wall Street after another round of upbeat data raised hopes for the US economy.
Investors remained hesitant before the release this week of Chinese third-quarter growth figures, as evidence accumulates of a slowdown in the world's second-biggest economy.
On Thursday, the European Union holds a summit, with a possible bailout for Spain on the agenda along with Greece's push to renegotiate its own rescue deal.
Reports indicate that Athens could be given more time to repay its huge debts, following comments from IMF chief Christine Lagarde in Tokyo that an extra two years would be acceptable.