European shares jumped on Tuesday to make their largest percentage gain since May 2010 and on track to make their biggest weekly gain since July 2010 on hopes policymakers were putting together measures to help ease the region's debt crisis. The plan lacked any clear detail, however, and there were concerns over how policymakers would implement it. Some analysts put the gains down to a relief rally and the key FTSEurofirst 300 index remained in bear market territory.
Bank stocks featured among the best performers, with the STOXX Europe 600 banks index up 6.8 percent, continuing their gains for the third consecutive session on the optimism of a co-ordinated action plan. They are still down 30.4 percent so far this year.
French banks BNP Paribas and Societe Generale, which have heavy exposure to sovereign debt in Greece and Italy, were the stand out gainers and rose 16.8 percent and 14.2 percent respectively.
The stocks have fallen sharply since late July, with BNP Paribas down 38.4 percent and Societe Generale 46.2 percent lower due to concerns about slowing growth and worries they could be hit by a funding squeeze if the debt crisis worsened. The pan-European FTSEurofirst 300 index of top shares closed up 4.6 percent at 938.38 points - its biggest one day percentage rise since May 2010 and third consecutive day of gains.
Trading was active on the index, with volume more than its 90-day daily average, while the Euro STOXX 50 volatility index, Europe's main fear gauge fell 7.6 percent, but it was still on track to end the month 27.7 percent higher. The higher the volatility index, the lower investor appetite for risk. The FTSEurofirst 300 was also on track to end the week higher 4.7 percent, its largest jump since July 2010 after a 5.9 percent drop in the previous week.
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