(MENAFN- AFP) European stock markets and the euro raced higher Tuesday on news that investor sentiment had rebounded in Germany in a sign that the eurozone's biggest economy is overcoming its brief malaise.
London's benchmark FTSE 100 index rose 0.56 percent to end the day at 6,709.13 points, while Frankfurt's DAX 30 motored ahead 1.61 percent to 9,456.53 points and in Paris the CAC 40 climbed 0.86 percent to 4,262.38 points.
Rome gained 0.71 percent and Madrid mustered a 1.20 percent gain.
The European single currency increased to $1.2538 from $1.2448 late in New York on Monday.
- German optimism grows -
Investment sentiment in Germany rebounded in November, a survey showed Tuesday.
After hitting a 22-month low in October, the widely watched investor confidence index calculated by the ZEW economic institute was back in positive territory in November, jumping to 11.5 points from minus 3.6 points the previous month.
"European stock markets took heart from a big turnaround in German investor confidence on Tuesday with bullish sentiment remaining over the prospect raised on Monday of government bond purchases by the ECB," said analyst Jasper Lawler at CMC Markets UK.
The ZEW barometer increased for the first time so far this year, soothing investor concerns over the German economy, which narrowly avoided a recession in the third quarter.
Europe's equity markets had bounced into modest gains on Monday after European Central Bank chief Mario Draghi hinted at more steps to tackle the threat of deflation.
"Stocks remain underpinned by comments from Draghi ... that an expanded asset purchase programme could include government bonds," added Atif Latif, head of trading at Guardian Stockbrokers.
In London, energy explorer Tullow Oil was the biggest gainer following positive broker comment. Tullow shares jumped 3.6 percent to 475 pence.
In Paris, trading in Areva shares was suspended after leaked reports -- later confirmed by the nuclear giant -- that it was abandoning its 2014 financial targets and suspending those for the next two years.
The state-owned company has suffered in recent years as interest in nuclear power has cooled following the 2011 Fukushima catastrophe in Japan, and recently announced it would step up sales of non-strategic assets and cut investments to shore up its finances.
Back in the foreign exchange market, the British pound hit a one-month low against the euro on news that 12-month inflation rose to 1.3 percent in October from 1.2 percent in September. Expectations had been for no change.
The euro rose to 80.13 British pence from 79.61 late on Monday. The pound meanwhile firmed to $1.5648, up from $1.5637 on Monday.
- Yen under pressure -
The yen remained under pressure following Monday's news that the Japanese economy has slumped into recession, with Prime Minister Shinzo Abe saying Tuesday he was calling a snap election and delaying an expected sales tax rise.
The euro surged as high as 146.70 yen, the highest level since October 2008.
And the dollar rose as high 117.05 yen, touching a peak it set in October 2007.
On the London Bullion Market, the price of gold rose to $1,192.75 an ounce from $1,182.50 late on Monday.
Asian equities traded mixed on Tuesday, with Tokyo leading gainers on bargain-buying after the previous day's sell-off, while Wall Street provided some support with another record close.
Tokyo -- which lost almost three percent Monday on news that Japan's economy was in recession -- rebounded by 2.18 percent.
Hong Kong and Shanghai extended their previous day's losses, despite a new trading link-up between the two exchanges. Hong Kong stocks lost 1.13 percent and Shanghai shed 0.71 percent.
Wall Street pushed higher on Tuesday, a day after huge takeovers in the oil and pharmaceutical sectors helped lift the S&P 500 to a new record.
The Dow Jones Industrial Average rose 0.24 percent to stand at 17,689.51 points in midday trading.
The broad-based S&P 500 added 0.42 percent to 2,049.83, while the tech-rich Nasdaq Composite Index gained 0.55 percent to 4,696.80.
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