By Atul Prakash and Liisa Tuhkanen
LONDON (Reuters) - Britain's top share index climbed to its highest level in more than a week on Friday after Greece presented a tough reform package in its bid to seal a debt agreement, with insurance stocks featuring among top gainers.
The FTSE 100 index closed 1.4 percent higher at 6,6673.38 points after hitting an intra-day high of 6,687.57 points, the highest since late June. The benchmark index closed 1.4 percent higher in the previous session.
Insurers rallied after Barclays (LONDON:BARC) raised its target prices for companies including Admiral Group, Aviva, Standard Life (LONDON:SL), Prudential (LONDON:PRU) and RSA Insurance. Their shares rose 1.6 to 4.2 percent.
"We expect flows in life insurance to remain positive, while mark to market on interest rate hedges could cause some negative impact on earnings, but we expect that to be modest," Barclays analysts said in a sector report.
British stocks tracked gains in European shares, which surged on expectations Greece's international creditors might agree on a debt deal. Eurogroup President Jeroen Dijsselbloem said euro zone finance ministers may make a "major decision" when they hold a special meeting on Saturday to weigh a new Greek proposal for emergency funding.
"For Greece, it looks like the majority of the euro zone want to find a compromise and this is boosting sentiment," said Tony Cross, market analyst at Trustnet Direct.
Greek Prime Minister Alexis Tsipras appealed to his party's lawmakers to back a tough reforms package after abruptly offering last-minute concessions to try to save the country from financial meltdown.
"Even with Grexit off the table, untold political damage has been done over the past week or so amongst Greece and other member states. A deal, should it finally be struck, will certainly be bullish for stocks," said Ipek Ozkardeskaya, analyst at London Capital Group.
InterContinental Hotels Group gained 3.1 percent after the company said it had agreed to sell InterContinental Hong Kong to a consortium of investors for $938 million and may return some of the proceeds to shareholders.
IAG (LONDON:ICAG), the owner of British Airways, rose 3.2 percent after budget airline Ryanair said it would accept an IAG offer for its stake in Aer Lingus (IR:AERL), paving the way for the 1.3 billion-euro ($1.5 billion) takeover of the Irish carrier to go ahead.
Among other risers, housebuilders Taylor Wimpey (LONDON:TW) and Barratt Developments (LONDON:BDEV) climbed 2.3 and 1.8 percent respectively after the government announced measures to remove obstacles to building new homes.
Mid-cap miner Lonmin (LONDON:LMI) fell about 12 percent to its lowest level since listing in 1982 as falling platinum prices and Glencore's divestment of its shareholding continued to weigh on sentiment.