PARIS -- European equities soared on Monday morning, adding to last week's recovery rally, as a deal to shore up Spain's ailing banks prompted investors to scoop up battered financial shares, with Banco Santander surging 7 percent.

At 0704 GMT, the FTSEurofirst 300 index of top  European shares was up 1.7 percent at 999.09 points while the euro zone's blue-chip Euro STOXX 50 index surged 2.3 percent to 2,194.38 points.

Over the weekend, euro zone finance ministers agreed to lend Madrid up to 100 billion euros for its bank rescue fund, more than an initial audit suggests it is likely to need.  

"It's a big number, much bigger than what people had been expected. It reduces the systemic risk, so it's hard not to be buying this morning," said David Thebault, head of quantitative sales trading, at Global Equities.

"But all in all, it's a credit line, provided to one sector of the Spanish economy in a bid to stop the bleeding. We're still far away from the definitive solution here."

The euro zone STOXX banking index jumped 5 percent, with BBVA up 8 percent and Credit Agricole  up 3.8 percent.