Eurostoxx 50: 2,763.34 (+57.59) Frankfurt DAX: 7,290.14 (+68.78) Paris CAC: 3,816.75 (+62.15)EUROPEAN SHARES closed at their highest in nearly two weeks yesterday on investor optimism about a plan for a wide-ranging response to the euro zone sovereign debt crisis.

Banks were the standout gainers, extending a rally into a third day and lifting the Stoxx Europe 600 Banking Index 4.1 per cent, led by heavyweights including Intesa SanPaolo and UniCredit, up 9.5 and 10.4 per cent respectively.

The Greek bank sector rose 7.7 per cent and the Thomson Reuters Peripheral Eurozone Banking Index was up 7.7 per cent.

Other banks to gain included Banco Santander, Credit Suisse and Société Générale, up between 4.4 and 6.2 per cent.

The European banking sector was further helped by strong results at US peer Morgan Stanley, whose stock rose more than 10 per cent.

Euro zone leaders were set to give their financial rescue fund sweeping new powers to prevent contagion and help Greece overcome its debt crisis, according to the draft conclusions of an emergency summit.

“It seems that everything they could have put in the mix, they have done,” said Bernard McAlinden, strategist for the European Securities Network.

“This can buy some time for economies to put their house in order,” he said.

National Bank of Greece surged 11 per cent to €4.90. EFG Eurobank Ergasias, Greece’s second-biggest lender, increased 6.8 per cent to €2.82.

Alpha Bank soared 3.8 per cent to €3.03.

Commerzbank rallied 9.6 per cent to €2.75 in Frankfurt, its biggest gain in 22 months. Barclays jumped 7.8 per cent to 239.9p in London, its largest jump since May 2010.

Swedbank jumped 6.2 per cent to 110.80 kronor. AstraZeneca rallied 2 per cent to 3,092p after winning US approval for its heart drug Brilinta.

Kingfisher advanced 5.6 per cent to 267.4p.

Nokia Oyj increased 2.5 per cent to €4.18.

Ericsson slumped 9.7 per cent to 83 kronor for its largest retreat in more than 2½ years.

Konecranes Oyj sank 8.3 per cent to €22.92 for its largest drop since November 2008. – (Bloomberg/Reuters