European stocks rose on Monday on signs of a thaw in interbank lending and the possibility of a second stimulus package in the United States.
The FTSEurofirst 300 index of top European shares ended up 3.8% at 928.29 points.
The index gained 4.2% on Friday, but is down more than 38% to date this year in a credit crisis that has brought the global economy to the brink of recession.
In Britain, the FTSE 100 index rose 5.4%, Germany's DAX rose 1.1% and France's CAC added 3.6%.
Wall Street took heart from Federal Reserve Chairman Ben Bernanke saying that another economic stimulus plan may be needed to revive lagging growth.
He told Congress on Monday another wave of government spending may be needed to boost the struggling economy. It was the first time Dr Bernanke had explicitly endorsed a second stimulus package.
The Dow Jones industrial average was more than 1% higher when European markets closed.
The three-month Libor rate fell more than one-third of a percentage point - its biggest one-day drop in nine months. This signalled that banks may have the confidence to lend to each other again.
Governments around the world have pledged more than $US3 trillion to guarantee bank deposits and interbank lending.
Bank shares
Shares in Dutch bank ING leapt more than 29% after the government contributed 10 billion euros ($US13.5 billion) on Sunday.
ING earlier forecast a loss of 500 million euros in the third quarter.
Among other European banks: Royal Bank of Scotland gained 23.2%, Barclays gained 7.1% and HSBC rose 5.4%.
But Societe Generale dropped 3% and BNP Paribas shed 1.9%.
European Central Bank President Jean-Claude Trichet has pledged to do whatever it takes to restore confidence in financial markets.
He told RTL radio in France on Sunday the ECB was working closely with the U.S. Federal Reserve to solve the financial crisis.
