Greek stocks are leading a European market rally on indications that Greece's new radical left government is advocating a more palatable version of its brash demand to have most of the country's debt burden forgiven.

The Athens stock exchange was up 7 percent in morning trading Tuesday, while the Euro Stoxx index gained 1.5 percent.

Markets were responding to comments by Greek Finance Minister Yanis Varoufakis, who said the government would, if necessary, use debt "engineering tools" to make Greece's 320 billion-euro debt mountain viable.

The Financial Times reported that during a visit to London Monday, Varoufakis suggested exchanging Greece's debt to its bailout creditors with growth-linked bonds. That would mark a less confrontational approach to creditors than the eight-day-old government's previous insistence on a flat debt write-off.