European shares rose to their highest in more than 17 months on Thursday, with banks gaining ahead of a European Union meeting to aid Greece while plans by Dubai to support its debt-laden firms provided relief.

By 0942 GMT, the pan-European FTSEurofirst 300 index of top shares rose 0.4 per cent at 1,077.11 points, hitting its highest intraday level since October 2008 at 1,078.63.

European Union leaders will hold a two-day summit, divided over how to help heavily indebted Greece and struggling to maintain confidence in the euro.

A pledge by Dubai's government to support the restructuring of debt-laden state-owned firms Dubai World and Nakheel by providing $9.5 billion in funding eased some concerns about sovereign debt problems. Dubai's benchmark index rose 4.8 per cent.

"The Greek problem hasn't gone away, and you have got the Portuguese downgrade reminding us that the so-called PIIGS economies are still vulnerable," said Bernard McAlinden, investment strategist at NCB Stockbrokers, referring to Portugal, Italy, Ireland, Greece and Spain.

"The Greek problem would affect markets more if it spread significantly to Spain. That would be the bigger worry."

Banks were higher ahead of the EU summit, and benefiting from some relief over the debt problems in Dubai. Barclays, HSBC, Societe Generale, BNP Paribas  and Deutsche Bank were up 0.2 to 1.3 per cent. – Reuters