PARIS - European stocks rallied early on Wednesday, as investors cheered Italian Prime Minister Silvio Berlusconi's pledge to step down, hoping his departure will speed up reforms to fix the country's finances and ease the euro zone debt crisis.
At 0805 GMT, the FTSEurofirst 300 index of top European shares was up 0.9 percent at 992.27 points, adding to Tuesday's 0.9 percent rise.
"There will be a relief rally on Berlusconi's departure, but it's hard to see it lasting. There is no guarantee his successor will be able to do a better job. Just keep your eyes on the Italian yields for now," Christian Jimenez, fund manager and president of Diamant Bleu Gestion, said.
Societe Generale gained 3.1 percent and UniCredit added 3 percent.
Data showing cooling Chinese inflation also eased worries of overheating, bolstering commodity prices along with shares of European mining and oil companies. Xstrata gained 1.9 percent and Total added 1 percent.