European Stocks Rise

European stocks closed up Monday after the Greek parliament approved critical austerity measures needed for Greece to receive a second bailout package from its European partners and the International Monetary Fund.

Meanwhile deal news in the U.K. provided an additional boost to sentiment for the FTSE 100 index.

Late Sunday, the Greek parliament passed a package of spending and wage cuts necessary for its second bailout worth at least €130 billion. Greece needs the bailout if it is to avoid a disorderly default in March, when a €14.5 billion bond repayment is due.

The benchmark Stoxx Europe 600 index ended up 0.7% at 263.17, though the index pared gains late in the session. Regionally, Germany's DAX closed up 0.7% to 6738.47, and France's CAC-40 added 0.3% to 3384.55.

Despite the upbeat mood Monday, uncertainty remains around the Greek debt saga given the backdrop of violent protests in Athens, which highlight the difficulties faced by authorities in implementing austerity measures. Indeed, gains in Europe's stock markets were far from outstanding, and the euro struggled to extend its gains versus the dollar.

In addition, Greece still hasn't reached a deal with its private creditors on the haircut they would be willing to take on their holdings of government bonds. Greece is expected to make an announcement on this by the end of this week.

Attention is now on the euro-zone finance ministers' meeting scheduled for Wednesday, where it is expected that a second bailout package for Greece will be approved. Mike Lenhoff, chief strategist at Brewin Dolphin, is confident, for now.

"It is difficult to imagine that Greece will not now be granted access to a second bailout. The betting must be that it will," said Mr. Lenhoff. "Bond and equity markets are likely to read this as another positive development in helping to diminish further the risk of contagion and subduing the euro zone's financial crisis."

Greece's ASE Composite index closed 4.6% higher at 834.41. Greek bank stocks surged, unsurprisingly. Alpha Bank ended up 20%, EFG Eurobank Ergasias increased 27% and Piraeus Bank gained 21%.

But aside from Greek banks, many of the region's blue-chip bank stocks ended in the red, despite a positive start to the session. It was confirmed Monday that the French regulator had lifted the ban on short selling of 10 stocks of French financial companies. The ban was first imposed on Aug. 12, 2011, after banking share prices plummeted following concerns about the European sovereign-debt crisis. Belgium's financial regulator also lifted its ban on holding a covered net short position in financial stocks, but kept in place the prohibition on net naked short selling, which is essentially selling an asset not owned. Spain's regulator has said it will lift its ban when market conditions stabilize, while the ban in Italy is in force until Feb. 24.

In Paris, Société Générale shares closed down 2.2%, and BNP Paribas ended down 2.1%.

Elsewhere, the U.K.'s FTSE 100 index gained 0.9% at 5905.70, outperforming its peers and posting its highest close since July 2011. The Confederation of British Industry updated its economic forecasts for 2012-2013 late Sunday and said it doesn't anticipate a technical recession in the country.

"All in all, the picture for the U.K. economy remains extremely sluggish," said Annalisa Piazza, an economist at Newedge. "However, no collapse in the economy is expected in the near term."

Corporate news was thin on the ground Monday, but in London, Cable & Wireless Worldwide shares surged 45% after Vodafone Group confirmed it was considering a bid for the company. Analysts said that at the right price, such a deal would make good sense strategically. Vodafone shares were up 1.0%.

In currency markets, the euro struggled to extend strong gains against the dollar. By 1650 GMT, the euro was fetching $1.3211, up just 0.1%.

Meanwhile, the optimism regarding Greece pushed crude-oil futures to rise as high as $100.62, its highest level since Jan. 31. Light, sweet crude for March delivery was up $1.38, or 1.4%, at $100.21 on the New York Mercantile Exchange by the close of European equity markets. Most actively traded gold for April delivery was up $1.10, or 0.1%, at $1,726.40 a troy ounce on the Comex division of Nymex, paring early gains.