Eurozone finance ministers and the International Monetary Fund struck a deal late yesterday that will see Greek debt cut by 40 billion euros (£32 billion), paving the way for around 44 billion euros (£36 billion) of bail out cash to be released.
The agreement helped London's FTSE 100 Index rise 28.4 points to 5815.1, while European markets were also higher with the Cac 40 in France up 0.6% and the Dax in Germany ahead 0.7%.
Banks were among those receiving a boost in London after yesterday's declines across the sector, with part-nationalised Royal Bank of Scotland the top FTSE 100 riser as it also benefited from a broker upgrade.
UBS said RBS was its preferred bank stock and added the appointment of Mark Carney as Bank of England Governor could herald a more balanced approach to bank regulation.
RBS shares rose 4% or 10.25p to 295.4p.
Water group Severn Trent edged 5.5p lower to 1550.5p despite the group posting a 1.6% increase in underlying pre-tax profits to £157.5 million.
In the FTSE 250, pub group Mitchells & Butlers fell 10.9p to 320.2p as investors took profits after a recent strong run following figures showing a 4% increase in annual pre-tax profits to £162 million.