With Wall Street closed, Frankfurt looked to Asia for inspiration and by the close of electronic trade the Xetra Dax index had posted a rise of 80.77 or 1.7 per cent at 4,945.74.
A strong showing in banking shares was attributed to comments by Mr Alan Greenspan, the Federal Reserve chairman, on Friday that raised hopes that US interest rates might fall.
Dresdner Bank led the advances, jumping 6.8 per cent at one stage before settling to close 1.98 deutschmarks higher DM73.10.
Deutsche Bank put on DM2.20 to DM108.20, Commerzbank rose DM1.20 to DM108.20 and HypoVereinsbank was DM4.10 higher at DM133.
Paris pared early gains as the dollar weakened in foreign exchanges. The CAC-40 index ended up 2.11 at 3,695.35, more than 65 points short of its session best.
Axa-UAP was heavily dealt as a squall blew up around the shares following last week's profits warning from a US broker in which Axa's US offshoot Equitable has a sizeable shareholding. The stocks came off 12 French francs at FFr584 in turnover of FFr687 million.
Banks, a weak market lately on Russian lending concerns, rallied, helped by an upgrade for CCF which advanced FFr30 or 7.7 per cent to FFr420.
Amsterdam ended marginally higher in spite of an uncertain session for financials. The AEX index added 3.53 at 1,076.22.
Madrid was supported by strong demand for defensive sectors, notably retailers and utilities. Milan closed higher, up 491 at 20.840, but off its best levels of the day, on sharp gains in Eni and a technical recovery in bank shares.
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