Europe’s benchmark stock index rallied the most in three weeks on Monday, as investors latched on to hopes central banks will launch more stimulus soon.

The Stoxx Europe 600 index SXXP, -0.52% jumped 3% to close at 321.76, its largest one-day percentage gain since Jan. 22.

Stocks opened with firm gains, getting a boost from an overall upbeat trading in Asia, where Japan’s Nikkei 225 NIK, +0.17% surged 7.2%. That jump came after data showed Japan’s gross domestic product shrank for the second time in three quarters at the end of 2015, which was seen as increasing pressure on the Bank of Japan to launch more easing measures.

In the same vein, European Central Bank President Mario Draghi said the governing council “will not hesitate to act” at its March policy meeting if the market turmoil threatens the economic outlook.

“In the light of the recent financial turmoil, we will analyze the state of transmission of our monetary impulses by the financial system and in particular by banks,” he said at his quarterly hearing before the Committee on Economic and Monetary Affairs of the European Parliament.

The ECB boss also rebuffed earlier reports that the central bank is talking with the Italian government about buying bad loans from the country’s banks as part of its asset-purchase scheme. Italian banks rallied on the report and ended the session firmly higher.

Shares of Unipol Gruppo Finanziario SpA UNI, -1.60% jumped 7.7%, Banco Popolare SC IT:BP climbed 7.3%, Banca Monte dei Paschi di Siena SpA BMPS, -0.95% rose 9.2%, and Banca Popolare di Milano Scarl IT:PMI gained 5.7%.

Other banks also jumped, with shares of Eurobank Ergasias SA EUROB, -1.99% up 30% in Athens and Credit Suisse Group AG CSGN, -1.48% rising 2.7%.

The Stoxx Europe 600 banks index SX7P, -2.44% rose 3.5%, trimming its year-to-date slump to 22%.

Trading volume was lighter than usual, as normal U.S. trading is closed for the President’s Day holiday.

Other movers: Shares of H&M Hennes & Mauritz AB HM.B, -1.65% advanced 3.5% after the Swedish clothing retailer said total sales rose 7% in January.

Reckitt Benckiser Group PLC UK:RB rallied 6.8% after the consumer-goods company beat its 2015 target and raised its dividend 12%.

HSBC Holdings PLC HSBA, -1.38% HSBC, -1.76% 5, +0.16% moved 1.4% higher after the global bank decided to keep its headquarters in London.

Precious-metals miners topped the list of decliners in Europe, tracking a slide in gold US:GCJ6 and silver US:SIH6 prices. Gold scored its biggest weekly gain since the 2008 financial crisis last week as investors flocked to safe haven investments on the back of a brutal week for equities and oil.

Shares of Fresnillo PLC FRES, +4.68% gave up 2.6%, and Randgold Resources Ltd. UK:RRS GOLD, -0.13% fell 2%.

Electricite de France SA EDF, -1.02% lost 1.3% after French newspaper Le Figaro said the utility company on Tuesday will report a slump in net profit.

You’re invited to Investing Insights: A global markets survival guide

If you’ll be in London on Tuesday, Feb. 23, you’re invited to join us for an evening of cocktails and conversation on the topics of shifting monetary policy, growth, currencies, and the outlook for investing opportunities and risks in European and global markets.

Our panelists for the evening will include MarketWatch Personal Finance and Investing Columnist Robert Powell; and Mark Hulbert, Editor of the Hulbert Financial Digest.

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