European shares inched higher on Monday morning led by banking and cyclical stocks ahead of a meeting by euro zone finance ministers at which they will discuss what terms of a Greek debt restructuring deal they are ready to accept.

The STOXX Europe 600 Banks index <.SX7P> was the best performing sector, up 1.1 percent, on hopes the outcome of the meeting would help Greece avoid a messy default.

Any agreement would remove the tail risk that Greece could exit the euro zone, said Veronika Pechlaner, a fund manager on the Ashburton European equity fund.

We are 'underweight' financials, but have added large cap names which do not need to undergo capital raising.

By 0822 GMT, the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.2 percent at 1,045.33 points.

(Reporting by Joanne Frearson)