European stock markets rose on Wednesday as investor sentiment picked up, fuelled by M&A activity and talk of disposals, while earnings season also got underway.

Germany's DAX index led the session, closing at 11,806 with a gain of 1.82%, while the CAC 40 in France followed closely behind, adding 0.99% to settle at 4,877.

The U.K.'s FTSE 100 lagged its continental counterparts with a mere 0.20% return to close at 7,164 after losses among gold miners and homebuilders offset some of the gains from a buoyant banking sector.

In individual stocks, emerging-markets focused bank Standard Chartered (SCBFF) topped the FTSE 100 after the India-exposed lender was boosted by budget pledges of stimulus in order to support the economy. The shares were up nearly 4% ahead of the close.

Royal Bank of Scotland (RBS) and Lloyds Banking (LYG) followed closely behind, rising by 3% and 2% respectively, as investors look past recent macro-related jitters and toward earnings season, which kicked off for the banking sector with full-year numbers from Santander (SAN) .

Deutsche Bank (DB - Get Report) saw its stock rise by more than 6% in response to reports that it could sell a 25% stake in its asset management unit in a deal that could help the German lender to avoid having to tap shareholders for new equity later in the year. The asset is reported to be valued at around €6 billion ($6.4 billion).

UniCredit (UNCFF) was the top riser in Italy, with the shares gaining more than 8%, as investors responded to an admission by Intesa Sanpaolo (ISNPY) that it is considering a bid for the insurer Generali (ARZGY) .

UniCredit has an indirect exposure to the deal through a shareholding in Mediobanca (MDIBF) , which, incidentally, is the largest shareholder in Generali. Mediobanca stock rose 2.5% after posting double-digit gains on Tuesday.

In France, Soc Gen (SCGLY) and BNP Paribas (BNPQY) were both higher by 3.9% and 4.6% respectively.