* FTSEurofirst 300 index up 0.6 pct
* Hopes that Greece will approve austerity plan grow
* Germany to discuss French proposals for Greek debt
By Harpreet Bhal
LONDON, June 28 (Reuters) - European shares closed higher on Tuesday as hopes grew that Greece's parliament will vote through the tough austerity measures needed to secure financial aid from international lenders and avoid a default on the country's debt.
The pan-European FTSEurofirst 300 index of top shares closed 0.6 percent higher at 1,080.83 points, its biggest one-day percentage gain in a week.
The Greek parliament is debating measures such as spending cuts, tax rises and privatisations to secure the next tranche of 12 billion euros ($17 billion) in aid from the European Union and the International Monetary Fund (IMF), with lawmakers set to vote on the plans on Wednesday and Thursday.
"Investors expect a positive outcome (from the Greek parliamentary vote) and some sort of resolution. Nobody really wants Greece to default because you can't predict the impact if a euro zone country were to default," said Anita Paluch, sales trader at ETX Capital.
Greek banks rose 4.7 percent on hopes that the austerity measures would be endorsed, while the STOXX Europe 600 banking index climbed 1.3 percent.
Sentiment was also boosted by France's agreement with its banks to roll over some Greek debt, while Germany said it will meet with the heads of its top insurers and banks on Thursday to discuss the French proposal for private sector involvement in a Greek debt rollover.
Analysts said the uncertainty surrounding the Greek debt crisis, and the possibility of it spreading to other highly indebted euro zone countries states, was making investors nervous.
"The tensions in Greece now seem to be causing such risk aversion that liquidity is drying up by the day and flow is becoming increasingly thinner with sellers grouping on the sidelines," said UniCredit credit strategist Markus Ernst.
The euro edged up against the U.S. dollar on Tuesday, though further gains looked limited as investors feared that a bailout would only delay an eventual default given the size of Greece's debt burden.
Across Europe, Britain's FTSE 100 , Germany's DAX and France's CAC-4040 added 0.8 to 1.5 percent, while the Thomson Reuters Peripheral Eurozone Countries index rose 1.5 percent.
COMMODITIES STRONG
Adding weight to the market's rally were gains in commodity stocks as metals and oil prices rose on a weak dollar as risk appetite improved.
The STOXX Europe 600 basic resources index was up 1.2 percent, in tandem with stronger copper prices , while oil majors added 0.4 percent as Brent futures rose to above $108 a barrel.
On the downside, the STOXX Europe 600 telecommunications index was the biggest sector decliner, down 1.1 percent, as Cable & Wireless Worldwide fell 13.9 percent after a profit warning to its lowest level since its demerger last year.
Siemens
Other fallers included Belgian discount supermarket chain Colruyt which fell more than 12 percent to a low last seen in November 2009, after missing consensus expectations for its full-year results.
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