European stocks extend gains on E.Z. optimism; DAX up 0.98%

Investing.com - European stock markets extended gains on Monday, as French and German leaders were to resume talks on a European fiscal plan ahead of this week’s key economic summit.

During European afternoon trade, the EURO STOXX 50 jumped 1.66%, France’s CAC 40 climbed 1.58%, while Germany’s DAX 30 advanced 0.98%.

French President Nicolas Sarkozy and German Chancellor Angela Merkel were to continue discussions on plan for stricter enforcement of the region’s deficit rules that they will present to EU leaders at Friday’s summit.

Market sentiment also improved after Italian Prime Minister Mario Monti unveiled a EUR30 billion package of austerity measures, which includes raising taxes and increasing the pension age. The plan was due to be presented before the Chamber of Deputies later in the day.

The financial sector continued to lead gains as shares in French lender BNP Paribas surged 4.92% and Societe Generale jumped 4.79%, while Italy’s Unicredit and Intesa Sanpaolo soared 5.93% and 4.78% respectively.

Meanwhile, German lenders were mixed, as Deutsche Bank’s shares declined 0.30% while Commerzbank jumped 4.98% after offering to repurchase as much as EUR600 million of hybrid equity instruments.

Elsewhere, German software company SAP declined 0.78% after UBS downgraded the firm to “neutral” from “buy.”

In London, FTSE 100 advanced 0.75%, as U.K. lenders continued to post sharp gains.

Lloyds Banking saw shares skyrocket 9.06%% and the Royal Bank of Scotland surged 5.65%, while Barclays and HSBC Holdings climbed 2.48% and 1.46%.

Meanwhile, mining stocks turned higher as shares in Rio Tinto advanced 0.45% and Bhp Billiton rose 0.74%, while copper producers Xstrata and Kazakhmys jumped 1.40% and 1.52% respectively.

On the downside, recruitment company Michael Page International plummeted 10.84% after announcing that full-year pretax profit will miss analysts’ estimates.

In the U.S., equity markets pointed to a sharply higher open. The Dow Jones Industrial Average futures pointed to a rise of 1.17%, S&P 500 futures signaled a 1.31% increase, while the Nasdaq 100 futures indicated a 1.37% gain.

Also Monday, data showed that retail sales in the euro zone rose more-than-expected in October, while investor confidence fell more-than-expected in December, remaining in negative territory for the fifth consecutive month.

Later in the day, the U.S. Institute of Supply Management was to release a report on service sector activity. The U.S. was also to publish government data on factory orders.