European shares rose on Wednesday, snapping two days of losses, led by bank stocks on hopes a European Union summit will result in a comprehensive plan to resolve the region's debt crisis.

Investors are hoping European leaders at Sunday's summit will agree steps to ease Greece's debt, strengthen the capital of banks exposed to euro zone sovereign debt and leverage the currency bloc's EFSF rescue fund to firefight any contagion.

Banks, sensitive to the outcome of any debt-crisis plan due to their exposure to sovereign debt, were among the top gainers, with the STOXX Europe 600 Banks index up 2.1 percent.

BNP Paribas , which has high exposure to sovereign debt, rose 6.2 percent. It had fallen on Tuesday after Moody's warning about France's credit rating triggered fears the crisis was spreading to larger economies.

Intesa Sanpaolo , up 7.3 percent, was the top mover on the Italian index , on hopes of an EU summit plan, but the bank is down 23.8 percent since late July on worries Italian debt levels are unsustainable.

We are getting a bounce on hopes that a plan to potentially expand the EFSF and recapitalise the banks could emerge over the weekend, said Colin McLean, managing director of SVM Asset Management.

European leaders, however, have tempered optimism a solution will be found on Sunday, with France President Nicolas Sarkozy the latest to say talks over methods to increase the firepower of the region's bailout fund were stuck.

Managers said Wednesday's share price moves were only short-term trades, and that long-term funds were unlikely to change their positions.

It is not clear how (the plans) will all work. We are cautious on banks and the talk is not enough to change our mind, McLean said.

He added he has been underweight banks for about a year due to concerns about the amount of money they need to raise.

Sentiment in banks had also been buoyed by a report in Britain's Guardian newspaper, that France and Germany had reached a deal to scale up the EFSF, but this was later denied by two senior European Union officials.

The market is moving on the slightest rumour, Jane Coffey, who manages $532 million in assets for Royal London Asset Management, said. The weekend EU summit could give a better undertone to a plan, but so many things could go wrong.

From what I see in the Guardian article, the plan does not seem very conclusive. I would not be buying the market if that was the plan.

Coffey has been negative on banks since 2008 and said they face having to raise more capital, and will have to write off a lot of sovereign debt at some point.

The pan-European FTSEurofirst 300 index of top shares closed up 0.6 percent at 968.11 points, but volume was low at 78.1 percent of its 90-day daily average, indicating a lack of conviction behind the gains.

The next resistance level for the benchmark was seen at the 50 percent Fibonacci Retracement, from the sell-off that started in July to its September low at 983.38 points. The next support level is seen at the 38.2 percent Fibonacci Retracement at 952.61.

Strong earnings news was another boost for the market, with drinks group Diageo one of the most actively traded stocks, jumping 4 percent in volume double its 90-day daily average after first-quarter sales beat forecasts.