European stocks higher on bailout reports; DAX up 0.42%

Investing.com - European stock markets were higher on Wednesday, as investor confidence strengthened on reports of a Franco-German deal to enhance the euro zone's bailout fund.

During European morning trade, the EURO STOXX 50 rose 0.64%, France’s CAC 40 gained 0.55%, while Germany’s DAX 30 climbed 0.42%.

Market sentiment strengthened on Tuesday after The Guardian reported that French and German governments had agreed to enhance the European Financial Stability Facility by EUR2 trillion, although both sides subsequently denied the report.

Concerns over the handling of the debt crisis in the euro zone also eased ahead of the October 23 European summit, as German Chancellor Angela Merkel acknowledged that the meeting will "mark an important step" in solving the region's financial troubles.

The financial sector led gains, with shares in France's BNP Paribas soaring 4.02%, and Societe Generale jumping 2.50%, while German Deutsche Bank saw shares fall surge 3.43% and Dutch ING Groep climbed 4.34%.

Spanish banks were also up, despite a decision by Moody's ratings agency, earlier Wednesday to cut the country's credit rating by two notches to A1 from Aa2. Shares in Banco Santander rose 1.01%, while BBVA jumped 1.27%.

Elsewhere, energy and automobile companies added to gains, as French firms EDF and Total rose 1.04% and 0.89% respectively, while car maker Renault soared 2.90%. Germany saw shares in electric power company RWE AG jump 1.97%, while Daimler and BMW advanced 1.71% and 0.69%.

In London, FTSE 100 increased 0.81%, tracking gains in European bank stocks. 

Lloyds Banking and the Royal Bank of Scotland were among the U.K.'s top gainers, with shares climbing 3.07% and 2.84% respectively, while Barclay's rose 0.71% and HSBC Holdings was up 0.71%.

British Petroleum added to gains, with shares rising 1.49%. Meanwhile, mining companies fell, tracking the downward trend in commodity prices, as Rio Tinto saw shares decline 0.77% and Bhp Billiton slipped 0.13%.

Elsewhere, U.S. equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a drop of 0.36%, S&P 500 futures signaled a 0.52% decline, while the Nasdaq 100 futures indicated a 0.89% fall.

Later in the day, the U.S. was to release government data on building permits and consumer price inflation.