(REUTERS) - European stocks rose early on Monday, adding to last week's 8.5 percent jump on growing hopes of a comprehensive solution to the Eurozone debt crisis as French President Nicolas Sarkozy and German Chancellor Angela Merkel meet ahead of a key summit.
Italy's fresh 30 billion euro package of austerity measures also eased tensions surrounding the country's finances and sparked a rally in Italian shares, with Milan's FTSE MIB index .FTMIB up 3.1 percent while Italian 10-year bond yields dropped towards 6 percent.
At 1230 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 1 percent at 994.84 points, a level not seen in five weeks.
Markets now seem to want to believe that Merkel and Sarkozy will come out with a common point of view and a lot of austerity and structural measures to bring down the debt and increase competitiveness, said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
And when you listen at their speeches, it looks like the points of view which were far apart clearly have come closer together. If they manage to come to an understanding, they still have to sell some of these very unpopular measures to the rest of Europe. And this would open the door for the European Central Bank to get more involved.