Europe shares gain 3 pct as Wall Street surges

European shares extended gains on Monday afternoon as better-than-expected U.S. housing data boosted Wall Street, already upbeat on a Treasury plan to cleanse banks of toxic assets. At 1602 GMT, the FTSEurofirst 300 index of top European shares was up 3.1 percent at 740.21 points, and had hit a day's high of 740.45.

Banks added most points to the index. BNP Paribas, Banco Santander, Barclays, HSBC and UniCredit were up between 3.9 and 16.9 percent.

Sales of previously owned U.S. homes rose at their fastest pace in nearly six years in February, data showed on Monday, providing some good news for the recession hit-economy.

Wall Street was strong from the outset on a plan to purge banks of toxic assets, a key element of a U.S. government drive to pull the world's biggest economy out of a deep recession.

The Dow Jones, S&P 500 and Nasdaq Composite were up between 4.2 and 4.6 percent.