European stock markets rallied on Tuesday in thin trading as traders returned to their desks after the Easter holiday to digest the latest developments on the Cyprus debt crisis, dealers said.
In London, the FTSE 100 index of leading companies rose 1.23 percent to 6,490.66 points, while in Frankfurt, the DAX 30 jumped 1.91 percent to 7,943.87 points and in Paris the CAC 40 climbed 1.98 percent to 3,805.37 points.
"The rise is technical, done on very low volumes" after "two rather difficult last weeks of March," trader Xavier de Villepion at Global Equities said.
US shares also rose in midday trade Tuesday, lifted by Europe, with the Dow Jones Industrial Average up 0.66 percent, the broad-based S&P 500 gaining 0.64 percent, and the tech-rich Nasdaq Composite Index adding 0.79 percent.
"The resilience of the European markets has set a good tone," said Patrick O'Hare of Briefing.com
In foreign exchange trade, the euro eased to $1.2834 from $1.2847 late in New York on Monday. Gold prices fell to $1,583.50 an ounce from $1,598.25.
All major European markets were closed on Friday and Monday for the long holiday weekend.
Post-Easter trade was buoyant despite the resignation of Cypriot Finance Minister Michalis Sarris, hours after a judicial probe was launched into how Cyprus was pushed to the verge of bankruptcy.
Sarris said he was stepping down as he would need to cooperate with judges probing the failure of Laiki Bank, of which he was formerly chairman. The bank's collapse was a major contributor to the island's near financial meltdown.
Current Labour Minister Haris Georgiades, would replace him, officials said.
The Cypriot central bank meanwhile said it was easing capital controls by raising the limit on business transactions from 5,000 euros to 25,000 and allowing people to write cheques of up to 9,000 euros.
In addition, the troika -- the European Central Bank, the European Union and the International Monetary Fund -- indicated readiness to give Cyprus more time to bring its budget into surplus, according to a draft loan agreement obtained by AFP.
The draft sets 2017 instead of 2016 as the target year for Cyprus to achieve a 4.0-percent primary budget surplus.
Cyprus was rescued with a 10-billion-euro ($13-billion) EU-IMF bailout last week.
In London trade, mobile phone giant Vodafone saw its share price surge on the back of market rumours over a potential break-up bid from Verizon Communications and AT&T.
Vodafone stock jumped as much as 5.98 percent, topping the FTSE 100 risers board before closing the session 2.98 percent higher at 192 pence.
"Speculation of a takeover is pushing the price higher," said trader Anita Paluch at Gekko Markets.
Elsewhere, traders also assessed a raft of downbeat economic news in the eurozone.
The Markit Eurozone Manufacturing Purchasing Managers Index fell to 46.8 points in March.
That was the lowest level since December and compared with the already weak reading of 47.9 in February.
The March outcome left the key indicator below the 50-points boom-bust line.
In another blow, official data also showed that eurozone unemployment hit a record-high 12 percent in February.
"The further rise in eurozone unemployment in February, coupled with the low level of March's manufacturing PMI, confirmed the underlying weakness of the economy," noted Capital Economics analyst Jennifer McKeown.
Investors meanwhile remain cautious ahead of this Friday's eagerly awaited non-farm payrolls report in the United States, which is the world's biggest economy.
And on Thursday, the Bank of England and the European Central Bank will announce the outcome of their monetary policy meetings.
Asian equities were mixed on Tuesday in the first full session after Easter, while Japanese shares sank for a second straight day as the yen extended its recent gains.
Tokyo fell 1.08 percent -- one day after tumbling more than two percent -- while Sydney ended 0.38 percent higher.