European shares closed sharply higher on Wednesday with recently battered banks staging a comeback and miners rallying on the back of solid earnings from U.S. group Alcoa.
The FTSEurofirst 300 index of top European shares closed 1.71 percent higher at 1,181.19 points, recouping Tuesday's losses.
Banks added nearly 6 points to the index, with Deutsche Bank up 4.8 percent, Credit Suisse up 4.1 percent and Barclays up 5.1 percent.
The European Central Bank acknowledged chances of negative growth in the second quarter, which analysts interpreted to mean a lower chance of further rate increases.
"That was quite a dovish statement from the ECB," said market strategist Bernard McAlinden at NCB Stockbrokers in Dublin.
"It is good to hear the ECB saying that, because one of the biggest worries the market has is that the ECB is on a campaign to hike interest rates," he added.
Comments on Tuesday from Federal Reserve Chairman Ben Bernanke on extending emergency lending facilities continued to lift shares, traders said.
Stricken UK mortgage lender Bradford & Bingley soared 27 percent amid signs of a bail out from its peers.
Higher metals prices and better-than-expected results from Alcoa provided a boost for mining stocks such as XStrata, Rio Tinto and BHP Billiton, which gained between 2-5 percent.
TUI rallied 5.4 percent after sources said that Russian investor Alexei Mordashov has bought 4 million shares from Fiesta Hotels and Resorts, which raised hopes of a faster turnaround at the German shipping and tourism giant.
In neighboring Belgium, imaging technology company Agfa-Gevaert ended the session 24.5 percent higher amid vague talk that Philips may be interested in making a 9 euro per share bid for the group.
Spain's Colonial clocked up a 14 percent rise after key shareholder Nozar sold 57 million shares to France's Natixis. Natixis fell 1.7 percent.
Oil and gas stocks fell as crude traded around $136 a barrel, well away from recent record highs.
Heavyweights BP, Shell and Total were between 0.1 and 0.5 percent lower.
TecDAX-listed wind turbine maker Nordex shed 15 percent after it issued a profit warning.
"Although we had anticipated a cut to guidance in our initiation report, the cut is larger than we expected and we see scope for reducing our earnings forecasts by further 10 percent," analysts at Commerzbank said in a note to clients.