European shares extended gains in afternoon trade on Thursday, closing in on a six-month high after a government source said Greek political leaders had agreed on an austerity measures deal with the European Union and the IMF leaders.

With this Greek news that's just come out . I think it's very positive for the market, I think we will be up to 6,000 (on the FTSE) very shortly, Trevor Coote, head of equity sales at Alexander David Securities, said.

At 1321 GMT, the FTSEurofirst 300 index finance/markets/index?symbol=gb%21FTPP>.FTEU3 index of top European shares was up 0.7 percent at 1,077.66 points after rising to a high of 1,079.25 points. Britain's FTSE 100 index .FTSE was up 0.6 percent at 5,909.43 points.

The rally came just ahead of a European Central Bank press conference, where the focus will be on fresh liquidity boosting measures as well as the Greek situation.