Europe's major stock indexes closed firmly in the green Monday, as financial stocks were bought on investors' hope for a rescue plan for U.S. bond insurer Ambac. But fears of further writedowns from the banking sector still cropped up.
Banking stocks closed over 2 percent higher, with shares in Credit Agricole up 4.8 percent. Dexia rose by 4 percent and Deutsche Postbank was up 0.9 percent.
Also in the financial sector, Royal Bank of Scotland was one of the lead gainers on London's FTSE-100 index, gaining 5 percent, on reports that the bank could be in the sights of Qatar's $60 billion investment fund as it seeks more opportunities in the European banking sector.
Germany's HSH Nordbank said Sunday it would start legal proceedings against Swiss bankUBS to recover significant losses on a $500 million CDO portfolio. UBS declined to comment on the reports to CNBC Europe.
The UK joined Germany in paying for the names of 100 wealthy Britons with money in Liechtenstein, reports said. The tax haven's LGT Bank said it would take legal action against a whistleblower for releasing customer details.
British bank Alliance & Leicester's shares gained 8.8 percent after comments by rival Lloyds sparked speculation that A&L could become a takeover target.
Shares in British property group Hammerson increased by 6 percent after it reported its full-year adjusted net asset value rose by 3 percent.
Finally, Roche Holdingreceived U.S approval for its key Avastin drug, sending shares higher on the positive surprise.