HBOS Plc rallied 51 percent as Lloyds TSB Group Plc agreed to acquire the U.K.'s biggest mortgage lender. UBS AG and Barclays Plc advanced more than 4 percent. Washington Mutual Inc. soared 18 percent in German trading on speculation of a sale for parts of the largest U.S. savings and loan. Volkswagen AG increased 13 percent as investors speculated that Porsche SE will make a full takeover.
Europe's Dow Jones Stoxx 600 Index added 1.5 percent to 261.97 at 12:05 p.m. in London, rebounding from its steepest three-day slide since 2002. Futures on the Standard & Poor's 500 Index climbed 1.7 percent. The MSCI Asia Pacific Index declined 1.6 percent, paring an earlier drop of as much as 4.3 percent.
More than $19 trillion has been wiped off global stock- market value since Oct. 31 as the worst U.S. housing recession since the Great Depression and more than $500 billion in credit losses and writedowns at banks slowed the world economy.
Stocks in Europe extended gains after a report showed retail sales in the U.K. rose 1.2 percent in August. Economists had forecast a 0.5 percent drop, according to the median in a Bloomberg News survey. Kingfisher Plc led retailers higher, climbing 9 percent.