European shares jumped on Tuesday amid renewed hopes about China's economic outlook, higher oil prices and the prospects of consolidation in the global steel sector.
The eurozone blue-chip Euro Stoxx 50 index was up 3 per cent at 3027 points as the European trading day came to an end.
At the same time, the Frankfurt stock market breached the key 10,000 mark following the release of figures showing a better-than-forecast gain in Chinese exports.
China could be on the brink of an "economic turning point" following a long-running slowdown in growth, said Jasper Lawler, analyst at the investment house CMC Markets.
The recent rally in oil prices helped to give both energy and banking stocks a lift, easing concerns about the credit risks facing the financial industry as a result of the price pressure on the energy sector.
After falling back in recent months, shares in Germany's biggest bank, Deutsche Bank, shot up 8 per cent in late afternoon trading in Frankfurt.
European shares were also driven higher by a press report that German steel giant ThyssenKrupp was holding talks with Tata Steel aimed at merging with part of the Indian steel group's operations.
The report in the daily Rheinischen Post resulted in ThyssenKrupp's shares rocketing up by 6 per cent in afternoon trading in Frankfurt.
Both ThyssenKrupp and Tata declined to comment on the report.
Steel prices have come under pressure over the last 12 months after China's economic slowdown hit demand for the metal and amid concerns that cut-price Chinese steel products were being dumped on the world market.
However, the talk of a shakeout in the global steel sector also sent shares in Germany's second biggest steelmaker Salzgitter higher with speculation that the company could also join a newly fused steel group.
The positive economic news out of China, combined with the speculation about consolidation in the world steel market, pushed German stocks 2.3 per cent higher to around 10,000 points. China is a major destination for metal exports and European mining stocks such as Anglo American and Rio Tinto emerged as among the major beneficiaries of the solid Chinese trade data.
Hopes of China turning in a more upbeat economic performance also drove German car stocks higher.