European stock markets rose but the euro fell against the dollar on Tuesday as investors cautiously welcomed a bailout deal for Greece that eased fears over a bankruptcy for the indebted eurozone country.
The benchmark FTSE 100 index climbed 0.30 percent to 5,803.99 points in late morning trade in London, also as official data confirmed that Britain had emerged from recession in the third quarter with robust growth of 1.0 percent.
Frankfurt's DAX 30 gained 0.34 percent to 7,316.65 points and the Paris CAC 40 advanced 0.16 percent to 3,506.45.
"European equities are trading moderately higher as overnight, EU finance ministers finally managed to agree to a compromise" on Greece, said ETX Capital trader Markus Huber.
"While a watered down deal was more or less expected and therefore is already to a huge degree priced into share prices, at the same time this agreement/compromise does remove a substantial amount of uncertainty" regarding Greece's membership of the eurozone, he added.
Greece won breathing space on Tuesday with long-frozen eurozone loans to restart from December and a first clear admission that a chunk of the country's debt burden will eventually have to be written off.
After 13 hours of talks in Brussels, the eurozone and the International Monetary Fund agreed to unlock 43.7 billion euros ($56 billion) in loans and on the need to grant significant debt relief for decades to come.
Greece must still meet a series of agreed conditions but "the decision will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece," said European Central Bank President Mario Draghi who left the talks before a final press conference.
The news led to buying of bank shares, with Deutsche Bank advancing 1.89 percent to 33.77 euros, French lender Societe Generale up 1.82 percent to 26.92 euros and Royal Bank of Scotland jumping 3.30 percent to 294.5 pence.
In foreign exchange deals on Tuesday, the European single currency was trading at $1.2947 compared with $1.2971 late in New York on Monday after an initial euro rally petered out.
Sterling rose versus both the euro and dollar in the wake of the positive British economic growth data.
Gold prices dipped to $1,747.65 an ounce from $1,750.50 on Monday on the London Bullion Market.
"The euro has gained some brief support overnight from the (Greece deal) announcement," said Lee Hardman, currency analyst at The Bank of Tokyo-Mitsubishi UFJ, adding that the measures were "likely to prove a short-term fix" rather than restoring long-term debt sustainability to Greece.
Asia-Pacific stock markets mostly finished higher on Tuesday, with Tokyo closing up 0.37 percent and Sydney rising 0.74 percent. Hong Kong ended flat.
Markets were also closely tracking progress in Washington aimed at averting the so-called fiscal cliff of spending cuts and tax hikes, which will likely send the economy into recession if it comes into effect.
The White House on Monday expressed optimism that a deal would be reached.
President Barack Obama spoke over the weekend to Republican House Speaker John Boehner and Democratic Senator Harry Reid, who control their respective chambers of Congress and are therefore key players in brokering an accord.
"We remain confident that we can achieve an agreement. Work has to be done. Work is continuing to take place," White House spokesman Jay Carney told reporters.