European stocks rallied Friday, with Paris soaring more than three percent on hopes that Greece and its creditors were close to a deal after Athens' latest proposals.

Sentiment was also soothed by another sharp rebound on the troubled Chinese stock market after a month-long rout, dealers said.

The benchmark CAC 40 index of leading shares in Paris jumped 3.08 percent to 4,903.50 points, compared with Thursday's close.

Frankfurt's DAX 30 soared 2.23 percent to stand at 11,241 points, while London's FTSE 100 won 1.25 percent to 6,664.10.

"The eurozone seems to be as close to a deal as it has done for the past five months, with progress seemingly genuine and credible," said analyst Connor Campbell at trading firm Spreadex.

"Of course, the Greek government still need to vote on the plan, with discussion over debt relief remaining the key factor."

The heads of the European Commission, IMF, European Central Bank and the eurozone will discuss Friday a last-ditch Greek reform plan submitted in a bid to avert financial collapse and exit from the single currency, EU sources said.

"We must speak at the highest level," one source told AFP ahead of the conference call that was due to begin at 1100 GMT between Jean-Claude Juncker, Christine Lagarde, Mario Draghi and Jeroen Dijsselbloem.

The four will "discuss the (Greek) proposals because we must conduct a joint analysis" at a meeting of eurozone finance ministers in Brussels on Saturday, the source added.

Greek Prime Minister Alexis Tsipras handed in the package to partners in the 19-country eurozone two hours before a midnight deadline on Thursday.

The reforms agree to creditors' demands to raise the age of retirement, increase sales taxes, and speed up privatisation. But they seek to limit changes on other thorny issues, including tax breaks for Greece's islands and cuts to military spending.

- Greek ball 'in Europe's court' -

"Greece left it until the last minute to submit proposals to help end the negotiations deadlock last night," added CurrenciesDirect dealer Davide Ugolini.

"Tsipras has done this before, but the surprising bit is that the proposals make meaningful concessions.

"Greece has finally managed to flip the ball into Europe's court. Crisis-watchers can look forward to an interesting weekend."

The euro hit a July peak at $1.1134 in early morning deals, as investors bet Athens' new proposals will be enough to placate its creditors and get the green light at a weekend EU summit. It later stood at $1.1123, up from $1.1036 late on Thursday.

Chinese stocks meanwhile surged for a second day on Friday as a government rescue plan offered a respite from a month-long rout.

The rally also provided some support to regional markets and commodities, which had earlier this week been hammered by fears about a spillover effect beyond the mainland.

The benchmark Shanghai Composite Index shot up 4.54 percent, taking its two-day rise over 10 percent after the government announced additional policies to avoid a market crash.

However, the Shanghai market is still down 24.9 percent from its closing peak on June 12.

- Ryanair clears way for IAG -

On the company front, markets digested news that Irish budget airline Ryanair has accepted International Airlines Group's bid for its near 30 percent stake in Irish rival Aer Lingus, clearing the way for a takeover.

IAG, parent of British Airways and Iberia, has made a takeover bid valuing Aer Lingus at a total of 1.4 billion euros ($1.5 billion).

Ryanair was left as kingmaker after the offer was accepted by the Aer Lingus board and given the green light by the Irish government, owner of a quarter of the company, in May.

In London midday deals, IAG shares flew 2.72 percent higher to 528.50 pence.

Another big gainer was InterContinental Hotels Group (IHG) which announced the sale of its Hong Kong hotel for US$938 million (837 million euros). IHG's share price gained 2.99 percent to 2,684 pence.