Banks lift FTSE on ECB's 3-year loans offer

"The success of the ECB's LTRO that has finally lent equities across the board some meaningful support," a London-based trader said.

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It is hoped the money will help avoid a 2008-style credit crunch and grease the cogs of a financial system that had threatened to stall through banks unwillingness to lend to each other.

But analysts warned that this could just be a shot in the arm for the beleaguered euro zone patient, rather than the cure the market has been waiting for.

"Before equity investors get all excited about the ECB saving the day, I just want to point out that the ECB is not curing the banking illness, it is merely given banks an aspirin to take away the pain (although maybe the latest round of deals from the ECB could be classified as the stronger codeine)," said Louise Coopper, markets analyst at BGC Partners

Lloyds was the top FTSE 100 riser, up 3.9 percent as Exane BNP Paribas upgraded the UK lender to "outperform" from "underperform" on valuation grounds.

"Trading at 0.4 times 2013 tangible book, the current share price appears to imply little or no franchise value for the 'Core' business," Exane said in a note.

"If economic conditions stabilise and Lloyds Banking Group is able to avoid raising capital then valuation of the 'Core' business starts to look highly compelling," it said, adding there is potentially 65 percent upside to the current share price.

That had a positive read across for the rest of the UK-listed banks, with Barclays and Royal Bank of Scotland up more than 2.9 percent each.

Also helping sentiment, the Bank of England policymakers left the door open for an extra cash injection into the faltering economy in February.

And in the U.S., stock market futures pointed to a higher open later on Wednesday, ahead of November existing home sales data due at 1500 GMT.