Volkswacht Bodensee - European stocks jump on French election hopes

Equity markets were also lit up following fresh Wall Street records after Federal Reserve chief Jerome Powell fanned hopes of a US interest rate cut.

The Paris stock market was Europe's standout performer after more than 200 centrist and left-wing candidates pulled out of Sunday's election runoff in France.

President Emmanuel Macron hopes the move will block the far-right National Rally (RN) of Marine Le Pen from gaining power.

France votes in the final round of snap legislative polls Macron called after his camp was trounced in European elections last month.

That gamble backfired, with RN winning the June 30 first round. But the key suspense now is whether the RN can get enough seats to form a government.

- 'Growing confidence' -

"French stocks lead as parties wrangle to avoid far-right majority," said Shore Markets analyst Joshua Mahony.

There was "growing confidence that the political wrangling underway in advance of this weekend's vote will avoid a majority for Le Pen's National Rally", he added.

London stocks meanwhile climbed, with the opposition Labour Party widely tipped to oust UK Prime Minister Rishi Sunak's Conservatives on Thursday, according to opinion polls.

"The UK Labour Party appears to be heading for a comfortable majority win, and the prospect of stability could provide a small boost to the market," City Index analyst Fiona Cincotta told AFP.

She cautioned however that "investors' apprehension could limit gains" ahead of the two key votes in Europe.

Elsewhere, Powell on Tuesday fuelled hopes of a US rate reduction by saying the battle against inflation had made "progress" and the job market was cooling.

After a run of above-forecast data and warnings from central bank officials suggesting monetary policy would remain elevated for some time, the remarks provided fresh optimism that a cut -- and possibly two -- was on the way before the end of the year.

- Key figures around 1045 GMT -

Paris - CAC 40: UP 1.6 percent at 7,658.25 points

Frankfurt - DAX: UP 1.0 percent at 18,343.29

EURO STOXX 50: UP 1.4 percent at 4,975.40

London - FTSE 100: UP 0.6 percent at 8,168.20

Tokyo - Nikkei 225: UP 1.3 percent at 40,580.76 (close)

Hong Kong - Hang Seng Index: UP 1.2 percent at 17,978.57 (close)

Shanghai - Composite: DOWN 0.5 percent at 2,982.38 (close)

New York - Dow: UP 0.4 percent at 39,331.85 (close)

Euro/dollar: UP at $1.0764 from $1.0749 on Tuesday

Euro/pound: UP at 84.72 pence from 84.71 pence

Pound/dollar: UP at $1.2706 from $1.2686

Dollar/yen: UP 161.94 yen at 161.46 yen

Brent North Sea Crude: UP 0.1 percent at $86.32 per barrel

West Texas Intermediate: FLAT at $82.82 per barrel

burs-rfj/bcp/cw

T.Zimmermann--VB