EUROPE MARKETS: European Stocks Extend Gains To A Second Day

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets rose for a second straight day on Wednesday, fueled by better-than-expected German consumer-confidence data and a raft of upbeat U.S. data the day before.

The Stoxx Europe 600 index rallied 1.7% to 284.30, building on a 1.5% gain from Tuesday.

Shares of Direct Line Insurance Group PLC climbed 4.8% after the U.K. firm announced plans to cut costs by 130 million pounds ($200 million) and cut about 2,000 jobs.

Spanish banks gained after Citigroup lifted the country's banking sector to neutral. Bankinter SA , which was upgraded to buy from sell, added 3.2%, and Banco Santander SA (SAN), which was lifted to neutral from sell, picked up 2.1%.

The IBEX 35 index jumped 2.4% to 7,789.10.

For the broader European stock markets, investors took inspiration from the U.S., where indexes rallied Tuesday after data showed increases in durable-goods orders, new-home sales and consumer confidence. The gains came despite the looming prospect that the Federal Reserve may slow its bond purchases if the U.S. economy improves. Also read: Bill Gross says Fed's tapering plan may be too hasty.

U.S. stock futures pointed to a higher open on Wall Street.

Most Asia markets also closed in positive territory. But China's Shanghai Composite Index dropped 0.4% as interbank money market rates remained unusually high, although down a bit from Tuesday.

In Germany, the DAX 30 index climbed 1.6% to 7,934.61. Data showed German consumers are optimistic about the summer, with the GfK consumer-climate study forecasting a value of 6.8 points in July, up from 6.5 points in June.

Among other country-specific indexes, France's CAC 40 index put on 1.9% to 3,717.10.

Shares of Unibail-Rodamco SE added 2.6% after UBS lifted the property-investment firm to buy from neutral.

The U.K.'s FTSE 100 index rose 1% to 6,165.38.

Outside the major indexes, shares of Afren PLC jumped 7.6% and Lekoil Ltd. surged 16% after the two firms said their Ogo well offshore Nigeria discovered a significant light oil field.

Shares of Etablissementen Franz Colruyt NV jumped 7.8% in Brussels after the discount food retailer late Tuesday reported a 6.2% rise in full-year operating profit.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires