At 6:32 a.m. EST, the FTSEurofirst 300 index of top European shares was up 1.5 percent at 1,328.3 points, after having lost nearly 2 percent on Friday.
The British government's decision to temporarily nationalize Northern Rock, combined with acquisition talk and optimistic expectations for dividends made banks the top performers of the day.
The FTSEurofirst has lost about 12 percent in 2008. Analysts said that stock rallies would be brief and the overall tone in the market was still negative in the wake of bank writedowns stemming from the credit crisis.
The broader European market has gained nearly 4 percent since January 22, when the U.S. Federal Reserve cut interest rates, but is still down 20 percent from last July's multi-year peak, a drop that defines a bear market for many analysts.