European shares were higher at midday on Tuesday as investors bet on more policy action from politicians to boost flagging global growth as the relief-rally at the start of the second-half continued.

By 1047 GMT, the FTSEurofirst 300 was up 3.84 points, or 0.4 percent at 1,039.16 points, adding to a 4.2 percent jump since Friday, when EU leaders revealed an agreement, which, among other measures, allowed the euro zone bailout fund to inject cash into struggling banks.

The crisis-fighting deal spurred hopes that European Central Bank President Mario Draghi may do more than just cut rates on Thursday.

The very fact that there was some kind of agreement at the summit might give Draghi some leeway to do something extra and I think that is what the markets are pricing in, David Morrison, strategist at GFT Global, said.

Morrison said measures could include a cut in the minimum deposit rate for banks, but he added there are imminent hurdles for the market to overcome if it is to push significantly higher including the upcoming quarterly earnings season and the next meeting of the Federal Reserve at the end of the July.

Weak economic data out of the U.S. on Monday suggested the momentum of the world's largest economy was beginning to lose steam, but also lifted hopes of further monetary stimulus at the July/August meeting from the world's biggest economy.

Gains in equities on Tuesday were more sanguine given the sharp rally seen since Friday and with Wall Street set to open flat as investors awaited further factory data due out of the United States at 1400 GMT.

But investors remained happy to pick up stocks which had under performed in the previous quarter, keen not get caught on the wrong side of a potential rally should policy makers decide to step in a flood the market with cheap cash and artificially boost asset prices.

Cheuvreux recommended that investors increase their exposure to euro zone equities and buy into any market dip after a EU agreement last week, which it said had eased the risk of a deepening of the region's crisis this summer.

Bank stocks, which fell more than 11 percent in the second-quarter on euro zone debt worries, advanced, with UK-listed Barclays, reversing an opening drop of more than 3 percent to rally x percent as the interest rate-rigging scandal claimed the scalp of chief executive Bob Diamond.

Analysts at Liberum said one of the key overhangs for the stock had been eliminated and Barclays now looked very cheap versus peers Royal Bank of Scotland and Lloyds Banking Group.

Hartmann Capital trader Basil Petrides said he had been buying Barclays shares over the last week following the stock's sharp decline on the back of the scandal and he would look to sell Barclays shares around the 190 pence level and would buy up further stock if it fell below the 160-165 pence level.

Beaten down basic resource stocks were higher too as theme of bargain hunting at the start of the second-half permeated the market with Vedanta Resources leading the miners up 4.7 percent.

But with some indexes nearing 7 percent gains in just 3 trading days, which in turn came on the back of a weak second-quarter performance when it fell 8.6 percent, technical pressure was already beginning to build.

The euro zone's blue chip Euro STOXX 50 index, which has jumped 6.2 percent in the two last sessions, will face strong resistance at 2,319 points, which represents its 200-day moving average, and at 2,330.79 points, representing the 50 percent retracement of its March-June slump.