European shares hit a five-week high on Wednesday morning on growing optimism European Union leaders will agree bold measures to resolve the euro zone debt crisis at a summit this week.
French President Nicolas Sarkozy and German Chancellor Angela Merkel were due to propose at the summit a plan to impose mandatory penalties on euro zone states that exceed deficit targets.
The FTSEurofirst 300 index of top European shares was up 1.1 percent at 1,000.07 points at 0859 GMT, just below a peak at 1,002.20, the highest since late October. The index fell 0.4 percent in light trading on Tuesday and is down 11 percent this year.
"Investors are pinning a lot on this summit," Hargreaves Lansdown equity analyst Keith Bowman said.
"Those hopes that Europe will be able to piece a deal together are still growing. They will be doing their best to try and avoid individual referendums across the zone, but that possibility remains and could provide some hurdles ... but there is room for further upside if we were to see some reasonably concrete action."
Banks, many of which have a significant exposure to peripheral euro zone debt and have suffered badly this year, were the top gainers. The sector index was 1.8 percent higher, while KBC Groep rose 7.1 percent.
French President Nicolas Sarkozy and German Chancellor Angela Merkel were due to propose at the summit a plan to impose mandatory penalties on euro zone states that exceed deficit targets.
The FTSEurofirst 300 index of top European shares was up 1.1 percent at 1,000.07 points at 0859 GMT, just below a peak at 1,002.20, the highest since late October. The index fell 0.4 percent in light trading on Tuesday and is down 11 percent this year.
"Investors are pinning a lot on this summit," Hargreaves Lansdown equity analyst Keith Bowman said.
"Those hopes that Europe will be able to piece a deal together are still growing. They will be doing their best to try and avoid individual referendums across the zone, but that possibility remains and could provide some hurdles ... but there is room for further upside if we were to see some reasonably concrete action."
Banks, many of which have a significant exposure to peripheral euro zone debt and have suffered badly this year, were the top gainers. The sector index was 1.8 percent higher, while KBC Groep rose 7.1 percent.
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