LONDON, Feb 12: European stock markets posted solid gains on Tuesday, helped by a firmer Wall Street as investors picked up bargains but also kept a wary eye on the banks after their US home loan troubles.

Dealers said that after recent heavy losses on persistent concerns over the US economic outlook, there was room for a bounce but the tone remained cautious overall given the risk of further problems in the financial sector.

They said news that Swiss banking giant Credit Suisse had managed to contain the US home loan damage in the second half of last year gave confidence a boost ahead of a series of results from the key banks.

Another firm start on Wall Street also helped, especially as it was driven by news that Warren Buffett, the billionaire investor, was ready to take over the top bond insurance companies.

In London, the FTSE 100 index jumped 3.54 per cent to 5,910.00 points, with the CAC 40 in Paris up 3.37 per cent to 4,840.71 points as in Frankfurt the Dax put on 3.33 per cent at 6,967.84 points.

The Euro Stoxx 50 index of leading eurozone shares was up 3.41 per cent at 3,803.76 points.

On Wall Street, the Dow Jones Industrial Average added 1.73 per cent to 12,451.28 points in early trade as investors cheered Buffett’s offer to reinsure up to $800 billion in municipal bonds.

In London, the banks and insurers led the way after the Buffett lead.

Legal & General jumped 5.83 per cent to 127.10 pence, Prudential was up 5.49 per cent to 615 pence and Standard Life added 5.18 per cent to 208.25 pence.

Among the banks, Barclays rose 6.17 percent to 475.75 pence and Standard Chartered was up 5.39 per cent to 1,602 pence.

—AFP