Bloomberg reported that the next bailout for Greece might extend the maturity of its loans to 50 years from 30 years, and cut the interest rate on some previous loans. Greek bond yields were sharply down following the report.
Other European markets focused on data from the U.S. which showed that private companies in the U.S. created 175,000 new positions in January. The figure was a bit lower than expected but in keeping with the pace of job creation over the past two years.
"Nothing changed in December or January fundamentally," Moody's economist Mark Zanki told CNBC after the data. "The economy is still improving."
The ADP data from the U.S. comes ahead of Friday's non-farm payrolls data for January. Investors will be watching the data closely to gauge the strength of the U.S. economy and predict the Federal Reserve's next move, a week after it announced it would further reduce its monetary stimulus program by another $10 billion a month to $65 billion.
(Read more: US private companies created 175,000 jobs in January vs.180,000 estimate)
Meanwhile in Europe, euro zone data showed business activity grew for the seventh consecutive month in January, offering a boost to markets.
(Read more: Euro zone business activity hits 2.5-year high)
Shares in Swatch closed up around 4 percent after the group said it expected healthy growth in 2014, and reported a 20 percent rise in net profit for 2013.
GlaxoSmithKline (GSK) said sales rose five percent in the fourth quarter of last year, narrowly beating expectations and indicating that the U.K. pharmaceutical giant's fortunes may be picking up. Shares closed the day up around 1.6 percent.
Shares in Syngenta, meanwhile, finished down roughly 3.5 percent after reporting earnings below analysts' expectations.
(Read more: Crop maker Syngenta sees earnings wither)
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