European shares extended gains on Thursday afternoon, with banks surging after European Union leaders struck a deal to help resolve the euro zone debt crisis.

At 2:21 p.m., the FTSEurofirst 300 <.FTEU3> index of top European shares was up 3.9 percent at 1,022.33 points, and had gone as high as 1,024.05, the highest in 12 weeks.

The STOXX Europe 600 Banking Index <.SX7P> rose 9.7 percent.