By Marc Jones
London - The euro hit a six-month high and European shares and peripheral euro zone bonds added to recent gains on Tuesday, as optimism over Greece's plan to buy back debt and signs of progress elsewhere in the bloc boosted sentiment.
The FTSEurofirst 300 index of top European shares was up 0.3 percent at 1124.97 points at 1045 GMT, with London's FTSE 100, Frankfurt's DAX and Paris's CAC-40 all in positive territory after a mixed open.
A surprise drop in US manufacturing data and signs of difficulties in US budget talks had hit Asian and US stocks, but Europe was brighter, leaving world shares up 0.1 percent.
News that Greece, which first triggered the euro zone crisis three years ago, was planning to buy back bonds to cut its debt, reassured investors across asset classes.
The buyback is a crucial part of a deal reached last week by Greece's international lenders to cut its debt pile and needs to be completed before the IMF can release its share of the aid.
“Greece is on track with its debt buy back, Spain came out and said it would take the 40 billion for its banks, and Portugal will get its next round of funding,” said Heinz-Gerd Sonnenschein, equities strategist at Postbank in Germany.
“Market participants were really encouraged by the Greek buy back, so with it looking like Europe is on track, it is now over to the US (to find a fiscal cliff deal).”
Global shares have risen 5 percent over the last two weeks as euro zone progress and signs of growth picking up in key economies like China have offset fears the United States could go into recession if political talks on tax hikes and spending cuts fail.
Worries loomed large on Monday after the White House dismissed a budget proposal from Republicans, saying it did not meet President Barack Obama's pledge to raise taxes on the rich.
With little in the way of data to take investors' minds off the budget wrangling, US stock futures pointed to a steady open on Wall Street when trading resumes later. - Reuters