Eurostoxx 50:2,179.42 (+88.33) Frankfurt DAX:5,473.03 (+256.32) Paris CAC:2,973.90 (+123.35)

EUROPEAN STOCKS advanced for the first time in four days yesterday.

The Stoxx Europe 600 Index rose 3.1 per cent in London, the biggest increase in a week. The gauge had declined 5 per cent in the previous three days, leaving it trading at 9.1 times estimated earnings.

“It seems politicians behind the scenes are making a determined effort to get more ahead of the curve dealing with the euro debt crisis,” said Witold Bahrke, a Copenhagen-based senior strategist at PFA Pension. “Politicians may be moving closer to securing a recapitalisation of banks and a more drastic solution on Greece.”

EU officials are working on plans to boost bank capital to contain the euro-region’s debt crisis, the International Monetary Fund said.

“There is no secret at all that European authorities and the European Commission are all working together on a plan to bring more official capital, more public-sector capital, into the banking sector,” Antonio Borges, the IMF’s European department head, said. “More should be done on a cross-border basis.”

Dexia rose 1.3 per cent to €1.02 after a four-day, 34 per cent tumble. Belgium’s biggest bank plans to pool its troubled assets into a “bad bank” with Belgian and French government guarantees to protect depositors and its municipal-lending business.

BNP Paribas rallied 8.5 per cent to €29.49 as a gauge of European banks rose 4.6 per cent.

Société Générale advanced 8.7 per cent to €19.60 and Credit Agricole increased 9.9 per cent to €5.17.

KBC, Belgium’s biggest bank and insurer by market value, jumped 15 per cent to €17.18, the largest gain since May 2010.

Axa, Europe’s second-biggest insurer, gained 8.8 per cent to €9.70 after the company reiterated its earnings target and said the balance sheet remains solid.

EADS, the parent of aircraft maker Airbus, advanced 5.7 per cent to €20.96.

PGS climbed 11 per cent to 57.95 kroner and CGGVeritas, the world’s largest seismic surveyor of oilfields, advanced 12 per cent to €13.

J Sainsbury, the UK’s third-biggest supermarket company, climbed 3.6 per cent to 284.6p. – (Bloomberg)