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European stocks close higher on Greece hopes

European equities closed higher on Wednesday, ending a six-day downward trend, on hopes of further assistance for Greece.

The pan-European FTSEurofirst 300 accelerated gains during the session to close around 1.7 percent higher, as Greece continued to dominate the headlines.

Reuters reported that the European Central Bank had raised the cap on emergency liquidity that Greek banks could draw from Greece's central bank. Media reports also suggested that Germany could be willing to offer Greece a staggered deal on aid.

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Greece's benchmark Athens Composite index closed around 1.1 percent lower, but all other major country and sector indexes closed higher on the day.

The U.K's benchmark FTSE 100 index closed around 1.1 percent higher, while the French CAC closed up at 1.8 percent. Germany's DAX index was one of the best performers, closing 2.4 percent higher.

U.S. stocks were also boosted by renewed hopes on Greece, with the Dow Jones Industrial Average adding 250 points.

In individual stock news, Standard Chartered was an outperformer, closing up around 5.8 percent after it dodged a downgrade and investors awaited a speech from U.K. Chancellor of the Exchequer, George Osborne, which might result in levy changes in the British banking industry.

Read MoreOsborne and Carney act tough in Mansion House speeches

Shares of U.K. supermarkets rallied on Wednesday, after Sainsbury posted weak quarterly sales that were no worse than expected. Sainsbury and rivals Tesco and WM Morrison all closed well above 4 percent higher, near the top of the FTSE 100.

In fixed income markets, yields—which move inversely to prices—on benchmark 10-year German bunds hit 1 percent for the first time since September 2014, as investors digested a generally stronger tone in European economic data.

Yields declined later in the session to around 0.98 percent.

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