LONDON- World stock markets charged higher on Wednesday, mirroring overnight Wall Street gains, on the back of investor hopes for a EU bailout for debt-ridden Greece, analysts said.

In morning European trade, London's benchmark FTSE 100 index gained 0.78 percent to 5,150.49 points.

Frankfurt's DAX 30 increased 0.99 percent to 5,552.33 and the Paris CAC 40 added 0.90 percent to stand at 3,645.09 points.

All three markets had risen Tuesday on improved prospects for European Union intervention to ease a crippling debt and deficit crisis in Greece.

In Asia on Wednesday, Tokyo shares added 0.31 percent and Hong Kong clawed back 0.67 percent.

Investors were boosted by hopes the European Union would move to tackle the debt and deficit problems centering on Greece, Spain and Portugal which threaten to hammer the 16-nation eurozone's credibility.

Greece's European partners are under pressure to approve a financial aid mechanism for Athens and are to convene at a summit Thursday in Brussels.

"Thursday's EU summit on boosting business competitiveness may not talk at any great length about the deficit problems of Greece and other peripheral members," said ING economist Rob Carnell.

"However, optimism began to grow on Tuesday that something on an EU bailout was in the works," said ING economist Rob Carnell.

"There is, as yet, no substance to this hope, and it may prove to have no substance."

The early departure of European Central Bank president Jean-Claude Trichet from a central bankers' meeting in Sydney, to attend the EU summit, bolstered speculation that a deal was in the works.

"First it was the banks, now its countries having problems with their debt levels," said ETX Capital senior trader Manoj Ladwa.

"Bailing out Greece would be a positive move and help alleviate some of the fears that have affected the market, but does it stop there?

"Who could be next to receive help with their debt levels and what point does the EU say enough is enough?"

Media reported Wednesday that Germany was looking to lead an EU "firewall" to contain the Greek debt crisis, possibly by guaranteeing loans to calm fears of a government default.

"The plan would be undertaken within the EU framework but led by Germany," Europe's biggest economy, the Wall Street Journal Europe reported, citing a source familiar with the matter.

"Germany has concluded that guarantees are likely the most efficient way to prevent the spread of the debt crisis," a source added.

The Financial Times cited an unnamed German official as saying that heavyweight Berlin has decided to "take a significant step."

"We are thinking about what we should do if the crisis spills from Greece into other euro countries," the official said.

"It's more about finding firewalls, containing the problem, than principally about helping the Greeks."

The Financial Times Deutschland, the newspaper's German-language edition, said Finance Minister Wolfgang Schaeuble was working on both a bilateral basis and at the European level on putting together a package to help Athens.

Wall Street had snapped back Tuesday from heavy losses a day earlier as financial market tensions eased.

The blue-chip Dow Jones Industrial Average jumped 1.52 percent to end at 10,058.64, a day after closing below the key 10,000 level for the first time since November 4.