Don't click on end point but bring your pointer back to end point after you move it away and this would start the arc. You can also use A and L to toggle between arc and line.
As Deepak said, don't click on the endpoint. From the start:
1. Activate the line command.
2. Click to place the first endpoint of the line.
3. Move your cursor and click to place the other end (for the sake of this example, say you moved straight up).
4. Move your cursor away from this point, then back to the endpoint and hover. The endpoint will turn into an orange ball. Now move your cursor away from the point and you should be creating an arc. When you moved your cursor away initially, if you moved it to the right, then the arc will be tangent to the vertical line and going to the right. Same for left.