The euro rose Thursday on a report that the European Central Bank is providing Greece with debt relief.

The euro was trading up 0.58 per cent to trade at $1.3143 US late in the afternoon.

The German newspaper Die Welt reported that the ECB was exchanging Greek bonds for new securities which will mature later.

But the Associated Press reported that an unnamed European diplomat said several options were being discussed to bring the country’s debt closer to the target of 120 per cent of economic output by 2020.

That target was set in October by EU leaders, who said then that was the maximum level they consider sustainable.

The options included help from the ECB, lower interest rates on bailout loans and helping Greece with an upcoming €5.5 billion ($7.2 billion Cdn) interest payment to bondholders.

Still, the diplomat said current plans to help Greece with its debt load would nonetheless leave the country with debt of 129 per cent of GDP by 2020.

Major European markets finish flat

The diplomat said international debt inspectors estimate in a new report that Greece's promised austerity efforts, a €100 billion ($131 billion) debt relief from private investors and a €130 billion ($170 billion) bailout fail to reduce the country's debt sufficiently.

Earlier Thursday, European stocks and the euro fell while borrowing rates rose for Italy and Spain's government debt, a sign that investors are worried that the two countries would be dragged back into a crisis that had shown some signs of easing.

The yield on Italy's ten-year bond has risen by 0.18 percentage points to 5.81 per cent while Spain's rate has risen another 0.07 percentage points to 5.46 per cent, a little down from earlier.

Italy is a particular worry because it is the eurozone's third-largest economy and its debt mountain stands at around €1.9 trillion, way more than the amount Europe has committed to its bailout facilities.

European markets levelled off after posting earlier losses with London's FTSE 100 index closing down just 0.12 per cent, Frankfurt's DAX off 0.09 per cent and the Paris CAC 40 up 0.09 per cent.

Jean-Claude Juncker, the Luxembourg prime minister who also heads the eurozone finance meetings, promised more clarity over Greece at another meeting of European finance ministers this Monday, when he said decisions will be made.

Also Thursday, Portugal's national statistics agency reported that the country’s jobless rate jumped to a record 14 per cent at the end of last year, in the latest grim sign of the bailed-out country's worsening economic problems.

The unemployment rate is the highest since authorities began compiling comprehensive national registers in 1950, and experts predict it will rise further as austerity measures and recession sap the economy's strength.

With files from The Associated Press