European stocks rallied on Friday, with a key index hitting a level not seen since before the market's early August nosedive, fuelled by renewed expectations of a bailout deal for Greece that would further ease tensions over the euro zone debt crisis.

The FTSEurofirst 300 <.FTEU3> index of top European shares unofficially closed 0.6 percent higher at 1,082.89 points, led by shares of euro zone lenders among the most exposed to Greek debt, such as Societe Generale , up 6.3 percent, and Credit Agricole , up 4.7 percent.

Debt-troubled Greece seemed to be edging closer to an agreement for a new rescue package that would allow the country to begin a debt swap with private bondholders and avoid a messy default, although nothing was officially announced on Friday.

No Greek news is good news, said Peter Garnry, equity strategist at Saxo Bank in Copenhagen. Investors seem to be positioning for a deal on Greece which would lift uncertainty in the short term.

(Reporting by Blaise Robinson; Editing by James Regan)