European shares hit a six-month high on Wednesday as encouraging economic numbers boosted sentiment, while Italian banks gained after the Italian Central Bank made it easier for banks to boost their capital base. The FTSEurofirst 300 index of top European shares was up 1.9 percent at 1,057.08 points after climbing to its highest since early August.
Sentiment was boosted by data showing that the manufacturing sector in Germany, China and the United States were in better shape than expected but strategists warned not to read too much into the data for Europe.
"Keep in mind that we are only in the early stages of implementation of the austerity measures across Europe, so there is pain yet to come. As such, we would not be carried away by these numbers," said Duarte Caldas, market strategist at IG Market.
The STOXX Europe 600 Banking index rose 3.8 percent, while the European basic resources index was up 3.1 percent, helped by the Chinese data. Italian banks were among the top gainers after Bank of Italy allowed more flexibility for banks in buying back subordinated bonds, making it easier to boost their capital base.
Banco Popolare, Banco Monte dei Paschi die Siena, BP Milano and BP Emilia won between 7.8 and 10.9 percent. The shares helped to push Italy's blue chip index 2.2 percent higher.
Italy's Intesa Sanpaolo and Spain's Santander, tapped the market and raised 1.5 billion euros and 2 billion respectively. The Euro STOXX 50, the euro zone's blue chip index, rose 2.2 percent to 2,470.79 points.
On the derivatives marketplace Scoach in Frankfurt bought puts and sold calls on the DAX made up more than 64 percent of all DAX trading volumes. The DAX turbo put with strike price and knock-out barrier at 6,925 points from Citigroup was the most traded product, followed by a DAX put at 6,000 points from BNP Paribas.