By Carla Mozee, MarketWatch

ECB providing Greek banks access to more liquidity

LONDON (MarketWatch) -- European stocks finished at a more than seven-year high Thursday, with investors latching onto upbeat developments about major risks from Russia and Greece that have dogged the eurozone for months.

The Stoxx Europe 600 rose 0.7% to 374.83, its highest close since December 2007, according to FactSet data, gaining traction after Russian President Vladimir Putin said European leaders reached an agreement for a cease-fire in Ukraine, starting Sunday. The deal, which calls for both sides to pull back heavy weapons, follows 10 months of fighting between Ukrainian troops and pro-Russian separatists.

Russia's Micex equity index swung out of the red to close Thursday's session higher by 2.6% at 1,810.11. The move pushed the Micex to a year-to-date gain of 29%. In 2014, the index dropped 7.2% as Russia grappled with sanctions related to the fighting in Ukraine, as well as the tumble in oil prices.

While news of a cease-fire "is clearly very welcome, a number of crucial points of disagreement remain, including over the redrawing of boundaries," said Kevin Ferriter, market economist at Capital Economics, in a note Thursday. "As long as there is still a large gap between the Ukrainian authorities and the rebels on these issues, a lasting peace is unlikely and investors will remain wary of the implications of continued conflict."

There are signs of progress for Russian equities, Ferriter said, but "each must be taken with a pinch of salt" as it appears a rebound in commodity prices will be modest and the Russian economy looks set to enter a deep recession this year. "In this context, it seems unlikely that equities will stage a sustained recovery."

The Russian ruble gained against the dollar, with the greenback (USDRUB) buying 65.635 rubles compared with more than 66 rubles ahead of the cease-fire news.

Meanwhile, Greece's Athex Composite climbed 6.7% to 846.48, extending gains after the European Central Bank raised the amount of emergency assistance that can be provided to Greek banks by 5 billion euros ($5.7 billion), according to German news reports. That brings the total amount of funding Greek banks can access through a program known as emergency liquidity assistance, or ELA, to 65 billion euros, reports said. Analysts have warned that inhibiting the ability of Greek banks to tap ELA could potentially create a funding crisis for the country's banking sector, analysts have warned.

In the group, shares of Eurobank Egrasias SA surged 13% and Piraeus Bank SA jumped 10.6%.

On the major European benchmarks, Germany's DAX rose 1.6% to 10,919.65, and France's CAC 40 picked up 1% to 4,726.20. The U.K.'s FTSE 100 rose a more modest 0.2% to 6,828.11.

Meanwhile, the British pound (GBPUSD) rose against the dollar, trading at $1.5389 after the Bank of England signaled it remains on course to raise the country's key interest rate from the record low 0.5%.

In other central bank developments, Sweden's central bank, the Riksbank, cut its main interest rate to negative territory and said it will begin bond-buying. The krona (EURSEK) fell sharply against the euro, with the euro buying 9.6005. It also fell against the dollar (USDSEK), leaving the greenback to buy 8.4149. Sweden's OMX Stockholm 30 index ended up by 2% at 1,624.535.

Separately, Germany's Bundesbank will buy German sovereign bonds amounting to around EUR10 billion ($11.4 billion) a month, as part of the ECB's quantitative-easing program that starts in March, a senior official told The Wall Street Journal.

Among individual stocks, Credit Suisse Group AG shares jumped 9.1%, after the Swiss bank said it swung to a profit of 921 million Swiss francs ($990.8 million) in the fourth quarter.

Total SA shares rose 0.8% after the French oil producer outlined plans to cut jobs and sell assets following its swing to a $5.66 billion net loss in the three months ending in December.

Shares of Renault SA rallied 11.5% as the carmaker posted a sharp rise in 2014 net profit to 1.9 billion euros ($2.3 billion), with stronger sales in Europe offsetting poor results in Russia and Brazil.

Finland's Outokumpu Oyj gained 14% after the stainless steel maker posted a narrower fourth-quarter loss and projected positive results for the first quarter.

Electricité de France SA shares dropped 3.8% after the power utility's 2014 net profit rise of 5.2% fell short of expectations.

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