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Paris - European stocks rose on Tuesday, with a key benchmark index hitting a nine-week high as eurozone banking shares gained on mounting expectation of more stimulus from the European Central Bank.
Shares in Deutsche Bank, Banco Santander and BNP Paribas were up 1.7-2.8%. That made them the top three risers among European blue chips, boosted by market speculation that the ECB will launch a quantitative easing programme in early 2015.
"Recent strong comments by (ECB President Mario) Draghi seem to be paving the way for the bank to start buying sovereign or corporate bonds," said IG France chief market analyst, Alexandre Baradez.
"There is very little chance to see the ECB back-tracking as long as inflation doesn't start to pick up, which will support stock indexes in the medium term."
At 12:15 GMT, the FTSEurofirst 300 index of top European shares was up 0.4% at 1 392.75 points, a level not seen since September 22.
The benchmark index has risen nearly 15 percent from a low hit in mid-October, boosted by the prospect of further ECB easing as well as recent policy measures taken by the Bank of Japan and the Bank of China.
Tuesday's rally was limited, however, by losses in resource-related shares, hurt by a recent slump in crude oil and metal prices. BHP Billiton was down 2 percent, BP was 0.6 percent lower and Total was off 0.8%.
Brent crude oil steadied around $80 a barrel on Tuesday ahead of a key meeting of Opec oil producers to decide on production levels for next year. Oil prices have tumbled more than 30 percent since mid-June.
Despite the recent rally in equities, Allianz Global Investors' CIO, Andreas Utermann, remains cautious on the outlook for risky assets.
"The lack of economic growth and the return of volatility is prompting us to be more pro-active in buying and selling assets to capture the big moves in prices," he said.
"We still favour the dividend theme in Europe. Stocks pay a hefty 3.5% yield on average, that's much higher than in the fixed income market."
Around Europe, Britain's FTSE 100 index was up 0.2%, Germany's DAX index was 0.9% higher and France's CAC 40 was up 0.5%.
Shares in E.ON jumped 3.4% after sources said late on Monday that E.ON's Italian assets had drawn interest from a handful of energy companies and investment funds on the final day for a binding bid.
Shares in Spain's Telefonica rose 1.1%and BT gained 1.5% after a report said the latter could offer at least €6bn ($7.5bn) to the Spanish company for the O2 mobile network, on top of a 20% stake in BT's share capital.
