Europe shares surge 5 percent on bank revival moves

LONDON (Reuters) - European stocks soared early on Monday as bold plans by countries from Europe to Australia to revive the struggling banking sector provided some relief to hard-hit investors.

At 08:19 a.m. British time, the FTSEurofirst 300 .FTEU3 index of top European shares was up 5 percent at 893.48 points. The index plummeted 22 percent last week -- its worst weekly performance on record -- on fears that the escalating credit crisis would topple more banks and trigger a global recession.

After an emergency meeting in Paris over the weekend, European governments agreed to provide capital for banks caught short of funds because of frozen money markets and to insure or buy into new debt issues.

The world's top central banks on Monday announced further measures to improve liquidity in short-term U.S. dollar funding markets.

Banks were the top weighted gainers, with BNP Paribas (BNPP.PA), Credit Agricole (CAGR.PA), UBS (UBSN.VX), Dexia (DEXI.BR), Standard Chartered (STAN.L) and Societe Generale (SOGN.PA) rising between 5.3 and 14 percent.

"For the time being, we seem to have returned from the edge of the abyss and should now see some badly needed stability in the markets," said Andrew Turnbull, senior sales manager at ODL Securities.

"And although these moves are likely to have resuscitated our failing banks from collapse, it is very unlikely that we will be saved from the clutching grips of recession and housing market deflation."

Three major British banks could take 37 billion pounds ($64 billion) in government money to boost their capital, the UK Treasury said. In Paris, a report by Dow Jones newswires said the French government would create a 40 billion euro ($55 billion) fund to take stakes in banks.

The French presidential office declined to comment on the report.