The FTSE 100 has risen sharply on Tuesday as investors moved towards riskier assets on the back of strong US corporate results and hopes of a Spanish bailout.
At close, the blue chip index was up 1.1 per cent to stand at 5870.54, with banks showing strongly among the top performers.
The news comes as two-thirds of US companies announced they had met or beaten expectations in their third quarter results. Meanwhile, Spain is understood to be ready to apply for a credit line which would pave the way for the European Central Bank to start buying bonds, easing concerns over the struggling country and the wider eurozone crisis.
The French Cac 40 and the German Dax rose 2.4 per cent and 1.6 per cent respectively, while the FTSEurofirst 300 was up 1.3 per cent and the Madrid Ibex rose 3.4 per cent.
Mining firm Evraz was the top-performer in the FTSE 100 with its share price rising 6.3 per cent. Banks dominated the top five with Lloyds Banking Group, Royal Bank of Scotland and Barclays all recording strong gains.
The US market also made gains in early trades on Tuesday. At 16.51, the Dow Jones was up 0.9 per cent.