* FTSEurofirst 300 up 1.6 pct, Euro STOXX 50 up 2.1 pct
* Shares up on report Greece ready to accept creditor terms
* Auto shares get boost from positive Exane sector note (Updates with closing prices)
By Atul Prakash and Alistair Smout
LONDON, July 1 (Reuters) - European shares extended gains on Wednesday after a report that Greece was ready to accept most conditions from its international creditors to clinch a debt deal.
The Financial Times, citing a letter Alexis Tsipras sent to the heads of the European Commission, the IMF and the European Central Bank, reported the Greek prime minister would accept all his bailout creditors’ conditions that were on the table this weekend, with only a handful of minor changes.
However, the status of the deal remained deeply uncertain. Germany said it could not negotiate while Greece was headed for a referendum on the aid-for-reforms deal and Eurogroup head Jeroen Dijsselbloem said he saw “little chance” of progress after Greek Prime Minister Alexis Tsipras said in a public address that Greece was being “blackmailed”.
“If ... a possible debt deal eliminates the ‘Grexit’ idea, then it’s a big positive for the market. But I remain sceptical and would like to see some concrete action and official announcements before becoming bullish,” Ronny Claeys, senior strategist at KBC Asset Management in Brussels, said.
The euro zone’s blue-chip Euro STOXX 50 index closed up 2.1 percent after falling 1.3 percent a day earlier and slumping more than 4 percent on Monday on alarm about Greece. The pan-European FTSEurofirst 300 index rose 1.6 percent, while Germany’s DAX gained 2.2 percent.
The indexes came off the session’s highs after Tsipras reiterated a call for Greece to vote “no” in a referendum on Sunday and reject the international bailout.
Across Europe, Britain’s FTSE 100 rose 1.3 percent. France’s CAC was up 1.9 percent, supported by a survey showing France’s manufacturing sector grew in June for the first time since April 2014.
Carmakers topped the gainers’ list in Europe, with the STOXX Europe 600 Automobile and Auto Parts index rising 2.9 percent. It was supported by a positive sector note from Exane, which upgraded its stance or raised the price target for Peugeot , Renault, Daimler, Continental , Porsche and Volkswagen.
“Our deep dive into replacement, ownership and demographic trends reveals powerful cyclical support that trumps longer-term structural concerns. Our analysis of labour and capacity trends suggests profitability can also surprise as productivity and utilisation rates rise sharply,” Exane analysts said in a note.
Airbus shares rose 3.7 percent after China placed an order for dozens of wide-body jets from Airbus in a multi-billion-dollar deal that paves the way for a second European aircraft plant in the world’s fastest-growing aviation market. (Editing by Ralph Boulton/Ruth Pitchford)