Sensex rises 200 pts on positive European cues; banks lead

Indian equity benchmarks rose 1.3% each following a rally in European markets. France's CAC and Germany's DAX climbed 1% each after Eurozone finance ministers approved a deal to rescue Spanish lenders. Britain's FTSE rose 0.77%.

The 30-share BSE Sensex jumped 225 points to 17,617.40 and the NSE benchmark was up 69.35 points to 5,344.50.

The euro zone ministers agreed to grant Spain an extra year until 2014 to reach its deficit reduction targets and set the parameters of an aid package for Madrid's ailing banks. But they made no apparent progress on how the bloc's new rescue fund, the ESM, will be used to intervene in bond markets. Spain's 10-year bond yields fell by 3.4% to 6.81% and Italy's 10-year bond yield declined by 2.66% to 5.93%

Back home, country's largest lenders State Bank of India and ICICI Bank gained 1% each while their rival HDFC Bank spiked 2%. Housing finance company too was up 1%.

Cigarette major ITC and engineering and construction major by sales Larsen & Toubro climbed 2% each.

Top commercial vehicle maker Tata Motors and largest car manufacturer Maruti Suzuki advanced 3% each.

Oil & gas producers Reliance Industries and ONGC were up 1% each. Top telecom operator Bharti Airtel gained 2.5% while its rival Reliance Communications shot up 6.5%.

Country's largest software services exporters TCS and Infosys moved up 0.7-0.9% ahead of earnings for the quarter ended June 2012 that scheduled for Thursday.

(With inputs from Reuters)