European stocks extend gains on banks, miners; DAX jumps 2.42%

Investing.com - European stock markets extended gains on Tuesday, led by the financial and mining sectors as investors turned to a meeting between German Chancellor Angela Merkel and International Monetary Fund President Christine Lagarde to discuss Greece’s bailout.

During European morning trade, the EURO STOXX 50 jumped 2.97%, France’s CAC 40 advanced 2.30%, while Germany’s DAX 30 jumped 2.44%.

European stocks found support after a positive start to the U.S. earnings season as Alcoa posted better-than-expected fourth quarter revenue.

Meanwhile, markets were jittery as Angela Merkel warned Greece on Monday that it would not be possible to give further financial aid without swift progress on its second rescue package, including a voluntary write-down on Greek debt held by private creditors.

Financial stocks were broadly higher, led by Italy’s Unicredit whose shares skyrocketed 10.18%, while German Deutsche Bank and France’s BNP Paribas surged 6.56% and 6.75%.

Societe Generale was also up, jumping 3.73% even though it forecast a “significant” drop in 2012 investment bank revenue.

Meanwhile, carmakers advanced as BMW, Daimler and Audi, owned by Volkswagen, said they plan to beat industry growth in 2012 following record sales last year. Shares in the three companies were up 3.60%, 4.79% and 2.09% respectively.

In London, FTSE 100 climbed 1.55%, after data showed that U.K. retail sales jumped in December and that house prices fell at a marginally slower pace in the fourth quarter.

Bhp Billiton and Rio Tinto surged 3.28% and 3.37%, extending earlier gains, while copper producers Xstrata and Kazakhmys soared 1.99% and 5.17%.

U.K. lenders were also sharply higher with Barclays jumping 5.03% and the Royal Bank of Scotland climbing 4.12%, while Lloyds Banking and HSBC Holdings soared 3.26% and 1.90%.

Elsewhere, Debenhams surged 12.48% after the U.K.’s second-largest department-store chain reported Christmas sales that beat analysts’ estimates and predicted that pressure from commodity costs will ease.

In the U.S., equity markets pointed to a sharply higher open. The Dow Jones Industrial Average futures pointed to a gain of 0.98%, S&P 500 futures signaled a 1.08% increase, while the Nasdaq 100 futures indicated a 0.98% jump.

Also Tuesday, a report showed that overnight deposits at the European Central Bank on Tuesday hit a fresh record of EUR481.935 billion, indicating that banks in the region remain unwilling to lend to each other.