European stock markets climbed on Wednesday owing to a positive start to the US earnings season and a brighter outlook for the banking sector, analysts said.
London's benchmark FTSE 100 index of top companies rose 0.74 percent to close at 6,098.65 points, its highest level since May 2008, before a global financial crisis morphed into a global economic crisis.
Banking stocks led the London index higher after analysts at Swiss bank UBS released an upbeat assessment for the sector in light of relaxed requirements under the so-called Basel 3 programme.
In Frankfurt, the DAX 30 index added 0.32 percent to 7,702.47 points while the Paris CAC 40 advanced by 0.31 percent to 3,717.45.
Equity markets were already well into the black in early trading owing to an upbeat earnings statement late Tuesday from US aluminium giant Alcoa, which often serves as a leading indicator as the annual results season gets underway.
The European single currency dipped however to $1.3053 from $1.3079 late in New York on Tuesday. On the London Bullion Market, gold prices edged up slightly to $1,657.75 an ounce, from $1,656.00 on Tuesday.
In London, "the main gainers have been the banks, boosted by an upbeat assessment from sector peer UBS in the wake of last weekend?s relaxation of Basel 3 requirements," CMC Markets senior analyst Michael Hewson noted.
Shares in Lloyds Banking Group leapt by 4.94 percent to 53.37 pence, its highest level since mid-2011, Royal Bank of Scotland posted a gain of 3.83 percent to 349.9 pence and Barclays was up by 2.63 percent at 294.75 pence.
In Frankfurt, Commerzbank shares jumped by 3.13 percent to 1.64 euros, and Societe Generale was 3.43 percent higher at 32.15 euros in Paris.
Gekko Global Markets trader Anita Paluch noted that "the cautiousness that prevailed yesterday has dissipated and investors resumed buying after Alcoa kicked off the earnings season boosting risk appetite."
IG market analyst Brenda Kelly added that "miners have seen significant buying interest on the back of the increased demand outlook foreseen by Alcoa."
Alcoa said that it had swung back into profit during the final quarter of 2012 on strong operations and a one-off gain despite a weakening of the metal's price.
The group reported earnings of $242 million (185 million euros), compared with a year-earlier loss of $191 million. The results were boosted by a gain of $161 million related to the sale of a hydroelectric asset.
On Wall Street, US stocks also swung higher in midday action on Wednesday, with the Dow Jones Industrial Average up by 0.66 percent, the broad-based S&P 500 adding 0.34 percent and the tech-heavy Nasdaq Composite gaining 0.58 percent.
Corporate news in Europe was less rosy, with French auto giant PSA Peugeot Citroen unveiling a 16.5-percent plunge in annual sales owing to problems in southern Europe and Iran, though that did no damage to the group's share price.
PSA, recently rescued by the French government and currently the second-biggest car manufacturer in Europe after German group Volkswagen, said sales fell below the three-million level last year, to 2.965 million.
PSA shares nonetheless jumped by 1.58 percent to 6.31 euros in Paris.
Back in London, shares in British insurer Aviva fell 2.15 percent to 373.7 pence after the group said it had sold its remaining minority stake in the Dutch insurer Delta Lloyd to unnamed investors for £353 million ($567 million, 433 million euros).
The announcement comes a week after Mark Wilson began his reign as Aviva chief executive following a turbulent time for the company, Britain's second-biggest insurer after Prudential.
Aviva said on Wednesday that it had sold its 19.4-percent holding for 12.65 euros ($16.55) per Delta share.
Asian stock markets had closed mostly higher earlier on Wednesday, snapping a recent losing streak thanks to Alcoa's earnings, traders said.
"Alcoa's results are generally considered a bellwether for the global economy and the fact that the aluminium giant forecasts higher demand in 2013 appeased investors," noted Stan Shamu, a strategist at IG Market in Melbourne.