European stocks rise before G7, with eyes on Greece

European equity markets rose Wednesday before a G7 finance meeting that will focus on Greece's debt drama, while airlines group IAG neared its takeover of Irish rival Aer Lingus.

Finance ministers and central bank governors of the Group of Seven (G7) wealthiest nations are meeting in Dresden to discuss the global economy and financial regulation, with Athens on the agenda amid stubborn fears of a Greek eurozone exit.

German Finance Minister Wolfgang Schaeuble has invited his counterparts and their central bank chiefs from Britain, Canada, France, Italy, Japan and the United States, for the gathering which kicks off later on Wednesday.

In mid-afternoon deals, London's benchmark FTSE 100 index of top companies rose 0.62 percent to 6,992.26 points, as investors also tracked the state opening of parliament and the legislative programme for Prime Minister David Cameron's newly-elected British government.

In Paris, the CAC 40 index added 0.70 percent to 5,119.25 points and Frankfurt's DAX 30 won 0.06 percent to 11,631.79 compared with Tuesday's closing level.

The European single currency lost early gains to slide to a new one-month low of $1.0819, compared to $1.0879 late in New York on Tuesday.

- Greek fears on hold? -

"The FTSE 100 is trading higher as the G7 meeting gets underway," said analyst David Madden at trading firm IG.

"Greece will be a topic for discussion at the G7 meeting in Dresden, and even though Greek fears have been put on hold today, the rally in European equities will be restricted because of it."

International Monetary Fund managing director Christine Lagarde, Eurogroup chief Jeroen Dijsselbloem, European Central Bank chief Mario Draghi and the EU Commissioner For Economic and Monetary Affairs, Pierre Moscovici -- all key players in the Greek dossier -- will all be at the G7 meeting.

The IMF, ECB and EU Commission -- previously known as the "troika" of Greece's creditors -- are currently trying to hammer out a deal that would unlock 7.2 billion euros in remaining bailout loans in return for pledges by Athens to push through crucial economic reforms.

As a June 5 repayment deadline looms, for which Athens may not have enough money to repay earlier loans from the IMF, the two sides have still not reached a deal.

There are growing fears that a Greek default could see the country tumbling out of the eurozone, spooking global investors and markets.

"Negotiations between Greece and creditors are scheduled to be resumed today in Brussels while the situation concerning Greece will also certainly feature at a G7 meeting in Dresden," said analyst Markus Huber at the Peregrine & Black brokerage.

- Airline stocks fly higher -

London was boosted after the Irish government agreed Tuesday to sell its 25-percent stake in Aer Lingus to British Airways owner International Airlines Group (IAG).

IAG's takeover deal offers Aer Lingus shareholders 2.55 euros a share -- 2.50 euros plus a 0.05 euros dividend -- valuing it at 1.36 billion euros.

The announcement sent IAG's share price 1.10 percent higher to 550.50 pence in London on Wednesday, while Aer Lingus shares won 1.67 percent to 2.43 euros in Dublin.

However, the takeover now hinges on the next move by Ryanair -- which owns almost 30 percent of the Irish flag-carrier. IAG said it would also make an offer to Ryanair for the shares it owns at the same price.

Shares in cigarette maker Imperial Tobacco rallied 2.98 percent to 3,382 pence after Reynolds American won regulatory approval to sell its Winston, Kool, Salem and Maverick brands to the British firm.

US stocks opened higher Wednesday, recovering some of the prior day's losses as good earnings from Tiffany offset a disappointing report from Michael Kors.

Five minutes into trade, the Dow Jones Industrial Average was up 0.18 percent to 18,073.60 points.

The broad-based S&P 500 added 0.14 percent at 2,107.07 points, while the tech-rich Nasdaq Composite Index advanced 0.17 percent to 5,041.55

In Asian stock market deals on Wednesday, Tokyo clocked up a ninth straight gain thanks to a weaker yen while Shanghai jumped for a seventh session as investors bet on China unveiling more economy-boosting measures.