European shares rose to their highest close in more than a month yesterday, tracking a surge on Wall Street sparked by a plan to cleanse banks' toxic assets and by better-than-expected home sales figures.

The FTSEurofirst 300 index of top European shares rose 3.1 per cent to end provisionally at 739.77 points, its highest close since Feb. 19. It has risen for three straight days. BNP Paribas, Banco Santander, Barclays, Deutsche Bank, HSBC and UniCredit were up between 4.6 and 15.1 per cent.

Wall Street was sharply higher around the time European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were up between 3.8 and 4.6 per cent.

Shares rose on a plan to purge banks of toxic assets, a key element of a government drive to pull the world's biggest economy out of a deep recession.

"It's one more step in this long story but it will not be the last step," said Romain Boscher, head of equity management at Groupama Asset Management, in Paris.

"We still think it will be necessary to nationalise some more banks."

Sales of previously owned US homes rose at their fastest pace in nearly six years in February, data showed yesterday, providing a further boost for the recession hit-economy.