Wall St. higher on hopes of Greek debt deal

(updated at 11:04AM)

By Tanya Agrawal

(Reuters) - U.S. stocks rose on Friday on hopes that Greece will be able secure fresh funding to avert bankruptcy and allow it to remain in the euro zone.

All three major indexes were up more than 1 percent in morning trading, with the Dow Jones industrial average and S&P 500 in positive territory for the month.

Greece has made substantial concessions in its latest proposal to lenders, including tax hikes, in hopes of receiving $59 billion to help it cover debts until 2018.

Euro zone finance ministers will meet on Saturday to decide on a third bailout for Athens.

U.S. markets fell sharply earlier in the week as concerns over a slowdown in China, a drop in commodity prices and the Greek debt crisis spooked investors.

"The markets are higher today because the combined pressure of Greece and China seem to have been elevated a little," said Mohannad Aama, managing director at Beam Capital Management in New York. "Greece isn't a done deal but the probability of a 'Grexit' is reducing."

Global markets were supported by a continued recovery in China's stock market, which rose strongly for a second day, helped by a barrage of government support measures.

At mid-week, panic selling had slashed a third of the value off Chinese markets since their peak in June.

Chinese Premier Li Keqiang said the country would make more targeted changes to its policies to support the economy and promised to increase the transparency of China's capital and money markets.

Investors will also look for clues on the timing of an interest rate hike in the United States when Federal Reserve Chair Janet Yellen speaks at a conference in Cleveland.

Yellen, scheduled to speak at 12:30 p.m. ET, will give her views on the prospects for U.S. growth, inflation and the job market.

"With the headline news earlier this week, it looked like December was more likely for a rate increase but any resolution to the Greece crisis will mean that September is back on the table," Aama said.

Data showed U.S. wholesale inventories rose at their fastest pace in six months in May.

At 10:45 a.m. ET the Dow Jones industrial average was up 138.33 points, or 0.79 percent, at 17,686.95, the S&P 500 was up 16.22 points, or 0.79 percent, at 2,067.53 and the Nasdaq composite was up 45.36 points, or 0.92 percent, at 4,967.75.

All 10 major S&P 500 sectors were higher, with the telecommunications index leading advancers with a 1.4 percent rise.

The U.S. quarterly earnings season kicked off earlier this week, with Pepsi (NYSE: PEP) and Alcoa (NYSE: AA) reporting better-than- expected sales. However, corporate earnings are estimated to have fallen 3.1 percent in the second quarter, according to Thomson Reuters data.

Barracuda Networks' (NASDAQ: CUDA) shares slumped 20.7 percent to $31.02 after JPMorgan cut its price target on the data storage and security provider's stock.

Cablevision (NYSE: CVC) jumped 7.7 percent at $26.75 on a Wall Street Journal report that French billionaire Patrick Drahi was looking at cable targets for acquisitions.

Zillow (NYSE: Z) fell 5 percent to $80.99, a day after the company said its chief financial officer was leaving the company to pursue other business interests.

Advancing issues outnumbered decliners on the NYSE by 2,237 to 650. On the Nasdaq, 2,007 issues rose and 588 fell.

The S&P 500 index posted 11 new 52-week highs and 11 new lows, while the Nasdaq recorded 54 new highs and 30 new lows.

(Reporting by Tanya Agrawal; Editing by Ted Kerr)

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