European markets rose on Wednesday after a letter from Greek Prime Minister Alexis Tsipras to creditors boosted hopes of a deal on reforms, but analysts warned that investors could be getting ahead of themselves.
Tsipras sent the letter on Tuesday as part of a request for further financial aid, although it only became public on Wednesday.
The Greek leader appeared to offer some concessions on reform plans, but also stuck to his guns on other proposals, such as maintaining a 30 percent discount on the VAT (sales tax) applied to Greek islands which lenders want abolished.
Read More Tsipras letter suggests Greece climbdown
European equities rallied 2 percent on the news, first reported by Financial Times, but analysts were divided on whether the concessions would be enough for a deal with creditors.
Peter Chatwell, an interest rate strategist at Mizuho International, said the letter was "not the climbdown that it seems."
"I strongly doubt Europe will accept this proposal and if Europe sticks to its guns and waits for the referendum, the greater the chance that the government fails," he said in a note.
While Carsten Brezski, senior economist at ING, told CNBC the letter was "another tactical move to stay ahead of the euro zone in the ongoing blame game, rather than a serious change of mind."
"In my view, the euro zone will not move any more ahead of the referendum," he added.
However, Craig Erlam, senior market analyst at forex trading platform OANDA, argued that the letter marked "an incredible U-turn from the Greek Prime Minister."
"Of course, the acceptance (of creditors' demands) does come with conditions attached which is hardly surprising, but they do appear to be watered down compared to previous demands," he said, adding that lenders might be willing to consider the proposals.
Read More 'The mood is black': Greeks struggle amid crisis
Greece is currently stranded in financial no-man's land, without a bailout program -- which expired at midnight last night -- and heading towards a referendum on whether to accept more austerity. If Greeks vote "no" to the reform proposals on Sunday, the county could leave the euro zone.
The Eurogroup will hold a conference call on Greece at 4.30 p.m London time on Wednesday to discuss the situation.
Also crucial for Greece, whose banking system has been paralyzed by capital controls imposed to prevent mass deposit withdrawals, is a meeting of the European Central Bank (ECB) on Wednesday. The bank is expected to review its emergency liquidity assistance (ELA) for Greek lenders, which it capped this weekend.