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LONDON (Alliance News) - UK stocks ended higher Wednesday, as tentative hopes grew that Greece and its international creditors would move towards a debt deal later in the day, providing some relief to the stock markets after days of uncertainty.

The equity markets also got a boost from positive economic data in Europe and the US, and as European Central Bank President Mario Draghi said he thought the bank's stimulus programme was working.

The FTSE 100 closed up 0.3% at 6,950.46, the FTSE 250 ended up 0.2% at 18,263.46 and the AIM All-Share ended up 0.4% at 778.13.

Europe's major indices fared even better, with the CAC 40 in Paris ending up 0.6% and the DAX 30 in Frankfurt closing up 0.8%.

When the European equity markets closed, the DJIA was trading up 0.5%, the S&P 500 was up 0.2% and the Nasdaq Composite was up 0.5%.

Greek Prime Minister Alexis Tsipras is due to meet European Commission President Jean-Claude Juncker in Brussels later Wednesday to try and hammer out a deal that would pave the way for unlocking aid to the Mediterranean country.

The head of the Eurogroup of finance ministers, Jeroen Dijsselbloem is also set to join the meeting, underlining hopes that a compromise deal between Athens and its international creditors may at long last be taking shape.

European Central Bank president Mario Draghi called for a strong agreement with Athens and its creditors to ensure Greece remains in the eurozone, although he said he wouldn't be attending the meeting.

"There is a general will and a strong determination that an agreement will be found," Draghi during the press conference that followed the ECB monetary policy decision in Frankfurt.

"The ECB governing council wants Greece to stay in the euro but only with a strong agreement that produces growth, includes social fairness and should be sustainable," said Draghi. "Negotiations are proceeding at this point of time," he added, declining to comment further.

The ECB left its key interest rates unchanged at a record low for a seventh consecutive session. The Governing Council, led by Draghi, held the refinancing rate at a record low 0.05%, following its meeting in Frankfurt, in line with economists' expectations. The central bank also held the deposit rate unchanged at negative 0.20% and the marginal lending rate at 0.30%.

The ECB has not considered an exit strategy for its EUR1.1-trillion quantitative easing programme, Draghi said. This is "a high-class problem and we are far from that," said Draghi. "We are still a long way to go in terms of inflation."

The central bank revised up its inflation forecast but left its growth projection largely on hold. The central bank expects the single-currency bloc to grow by 1.5% in 2015, the same as its forecast in March. Growth will then accelerate to 1.9% in 2016 and by 2% in 2017. While the growth figure for next year was the same as the March estimate, the 2017 forecast was down from the 2.1% projected three months ago.

Draghi admitted that the ECB had expected stronger euro area growth figures for the first quarter. He said growth momentum slowed because of weakness in economies outside the single currency bloc.

The inflation projection for this year was lifted to 0.3% from zero seen in March. The forecasts for next year and 2017 were maintained at 1.5% and 1.8%, respectively.

Following Draghi's press conference, the euro rose sharply and was trading at USD1.1270 when the European equity markets closed.

European equity markets were also buoyed as eurozone private sector growth slowed less than estimated in May, with the final composite output index from Markit falling to 53.6 from 53.9 in April, above the initial flash score of 53.4 economists' expectations for a reading of 53.3.

The Markit PMI Composite index for France came in at 52.0, higher than expectations for 51.6 and the previous reading of 51.0, while the Services PMI index for Germany came in at 53.0, slightly better than economists' expectations for 52.9.

In the US, payroll processor ADP released a report showing that the pace of job growth accelerated in May. ADP said the private sector added 201,000 jobs in May following a downwardly revised increase of 165,000 jobs in April, with economists expecting an increase of about 200,000.

The pound managed to recover almost all of the drop it made after the key UK services sector expanded at the weakest pace in five months in May. The Markit UK Services PMI for the services sector fell to 56.5 in May from 59.5 in April, with economists expecting a reading of 59.2. It was the steepest decline since August 2011. However, any reading above 50 still indicates expansion in the sector.

When the European equity markets closed, the pound was trading at USD1.5341.

On the London Stock Exchange, TUI Group joint Chief Executive Peter Long is set to become chairman of the travel and cruise operator and the chairman of Royal Mail after the postal operator said he will succeed Donald Brydon as its chair on September 1. Royal Mail said Long will join its board as a non-executive director and chairman designate on June 18, and will stand for election at its annual general meeting on July 23. He will then succeed current chairman Brydon at the start of September.

TUI Group separately said Long will remain as its co-chief executive until its own AGM in February 2016, at which point he will become chairman of TUI Ag's supervisory board. Fritz Joussen will be appointed TUI's sole chief executive.

TUI Group shares ended up 2.3%, while Royal Mail closed up 0.4%.

Dixons Carphone shares ended down 0.9% even though it reported growth in like-for-like sales in both the fourth quarter of its financial year and in its full year, and said it expects pro-forma headline pretax profit for the year to exceed the top end of its guidance. The FTSE 100 electricals and telecoms retailer said that like-for-like revenue in the 17 weeks to May 2 was up 9% and up 6% for the full year to the same date.

Cantor analyst Mike Dennis said he remains positive on the stock, but is not surprised by the fall in share price given the recent strong performance by the company's shares. Since the end of April, the company's share price had risen by approximately 13%.

In the FTSE 250, Workspace Group was the best-performing stock, closing up 6.5%. The property company said its pretax profit surged in the financial year to the end of March, as its rental income increased, occupancy improved, and the underlying valuation of its portfolio jumped. It said its pretax profit for 2015 was GBP360 million, up 43% from the GBP252.5 million it posted a year earlier. Analysts have hailed the annual results, with Liberum Capital and Panmure Gordon both lifting their target prices and maintaining their Buy recommendations as Workspace beat their expectations.

Morgan Advanced Materials and Spectris ended down 2.5% and 1.4%, respectively, after UBS downgraded both of the stocks to Sell from Neutral. Meanwhile, Melrose Industries closed up 2.6% after being upgraded by UBS to Buy from Neutral.

After the market close Wednesday, the FTSE Committee will announce its index review decision based on Tuesday's closing prices. Aerospace and defence company Meggitt is likely to drop out of the FTSE 100 after a volatile March and a weak share performance in April and May, while satellite communications service provider Inmarsat is set to return to the blue-chip index following a strong run in its shares since the previous index review.

Often, the likely moves become apparent in the days ahead of the index review. However, this time the changes to the FTSE 100, outside of Inmarsat and Meggitt, are too close to call. Wm Morrison Supermarkets, Sports Direct International and Aggreko are amongst the other potential candidates for demotion from the FTSE 100.

In the corporate calendar Thursday, EasyJet releases its May traffic statistics, while Johnson Matthey, Pets At Home, VP and Wincanton publish full year results. 888 Holdings issues a first-quarter interim management statement, while WANdisco issues a first-quarter update. Meanwhile, Asian Total Return Investment Co, Promethean World, JKX Oil & Gas and Genesis Emerging Markets Fund issue interim management statements.

In the economic calendar, the Bank of England interest rate decision is expected at 1200 BST. In the US, jobless claims data are due at 1330 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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