LONDON (Dow Jones) -- European stocks were trading higher Tuesday, led by banks after a draft proposal by French banks to roll over the majority of their Greek debt exposure eased concerns ahead of the parliamentary austerity vote in Greece on Wednesday.

Under the plan, French banks will agree to roll over 70% of their maturing Greek debt over the 2011-2014 period. The Stoxx Europe 600 banks index rose 0.7% to 177.93, with most commentators expecting the new Greek austerity measures to be passed on Wednesday. This would likely lead to an announcement on further funding for Greece by the beginning of July.
“An announcement from French banks that they are happy to rollover Greek debts pushed us higher as a glimmer of hope that a default can be averted rippled through the market. Banking stocks staged a recovery from earlier lows, a sector that will always benefit from any news that shows the wolves are being kept from the door,” said Angus Campbell, head of sales at Capital Spreads.
In the mean time Greece is gripped by a 48 hour general strike, as thousands of workers hit the streets to show their opposition to the government’s five-year EUR28 billion austerity plan and privatization program.
“The evidence thus far suggests that Greece is very much in austerity fatigue stage already and even if the most recent austerity package is passed, it is difficult to see how Greece can extract itself from its fiscal situation without default,” said Goodbody Stockbrokers economist Dermot O’Leary.
“With this in mind, it is difficult to see how the market will be convinced, although if agreement is reached, it can be seen as a significant step forward,” he concluded.
By 0745 GMT, Stoxx Europe 600 index was up 0.6% at 265.48. London’s FTSE 100 was 0.7% higher at 5760.68, Frankfurt’s DAX gained 0.7% to 7160.73 and Paris’s CAC-40 was up 1.2% at 3840.97. Athens’ ATHEX Composite was 1.9% higher at 1249.04.
Meanwhile, corporate news was mixed in Europe Tuesday.
French retailer Carrefour was up 2.6% at EUR27.14 after Gama, a Brazilian firm fully owned by an investment fund managed by Brazilian financial group BTG Pactual SA, sent a proposal to Carrefour and the shareholders of Brazilian retailer Companhia Brasileira de Distribuicao Grupo Pao de Acucar to merge the assets of both retailers in Brazil.
If the proposal goes ahead, it would lead to the largest player in Brazil’s retail industry.
On the downside, TomTom slumped 25% to EUR3.65 after issuing a profit warning. TomTom became yet another electronics company to suffer from the downbeat consumer environment in Europe.
TomTom reduced its expectations for full-year earnings per share to a range between EUR0.25 and EUR0.30, down from the previous guidance of EUR0.49. The Amsterdam-based company also cut its 2011 sales forecast for the second time this year.
Adidas climbed 3.6% to EUR53.62, gaining momentum from better-than expected fiscal fourth-quarter results from Nike. Nike’s results came after the close of U.S. equity markets.
On Monday Wall Street snapped a three-day losing streak, as the technology sector surged and financial stocks jumped on banking capital requirements that were less onerous than expected. International regulators agreed, over the weekend, to require the world’s largest banks to hold an extra layer of financial padding. The agreement, will force global banks that are considered ‘too-big-to-fail’ to maintain capital cushions that are significantly thicker than other institutions.
The Dow Jones Industrial Average finished up 0.9% at 12043.56, led by Microsoft and Bank of America. The Standard & Poor’s 500-stock index rose 0.9% to 1280.10, as technology, consumer discretionary and financial stocks registered strong gains. All 10 of its sectors traded in positive territory. The technology-heavy Nasdaq Composite rose 1.3% to 2688.28.
Asian equity markets ended mixed Tuesday, as investors awaited fresh developments around the Greek debt crisis.
Japan’s Nikkei Stock Average finished up 0.7%, Australia’s S&P/ASX 200 advanced 0.3%, South Korea’s Kospi Composite fell 0.4%, Hong Kong’s Hang Seng Index was down 0.1%, China’s Shanghai Composite Index ended flat and India’s Sensex gained 0.2%.
In foreign exchanges, investors found an appetite for the single European currency on growing hopes the Greek parliament will pass its austerity measures this week and on optimism about the prospect of a broad plan with European Union guarantees to rollover Greek debt.
At 0550 GMT, the euro was fetching $1.4311, from $1.4282 late in New York on Monday, and Y115.61 against the yen, up from Y115.53. The dollar was at Y80.78, compared with Y80.89.
In other asset classes, spot gold was at $1,501.80 per troy ounce, up $6.55 from its New York settlement on Monday. August Nymex crude oil futures, which have been under selling pressure on global demand worries and since last week’s decision by the International Energy Agency to release strategic crude oil reserves, were up $0.51 at $91.12 per barrel. September bund futures were at 126.76, down 0.14, as investors shunned safe haven territories for the euro and equities.
On the economic agenda, the final release of U.K. first-quarter gross domestic product data are due at 0830 GMT. GDP growth is expected to be maintained at 0.5%. U.S. S&P/Case Shiller house prices are at 1300 GMT, followed by consumer confidence at 1400 GMT.

Highlight: A draft proposal by French banks to roll over 70% of their maturing Greek debt over the 2011-2014 period eased concerns ahead of the parliamentary austerity vote in Greece on Wednesday.