Athens vendor Dimitris Ptohos poses for a photograph inside his kiosk in Athens September 25, 2011. [Photo/Agencies]

LONDON - European shares jumped higher for a third straight session on Tuesday on renewed expectations that European policymakers will act to contain Greece's debt problems and resolve the region's debt crisis that threatens to derail the world economy.

At 0705 GMT, the pan-European FTSEurofirst 300 index was up 2.2 percent at 917.44 points after rising 1.8 percent on Monday on talk policymakers were drawing up plans to boost the size of the regional bailout fund, halve Greece's debts and recapitalise banks, although officials downplayed the reports.

"Given so much uncertainty at the moment, there is room for both pessimism and optimism. The optimists have taken the forefront on hopes that we could see European politicians getting to grips with the current situation over the coming weeks," said Keith Bowman, analyst at Hargreaves Lansdown.

"But there are still a lot of concerns. Investors remain sceptical about the success of the measures being planned to resolve the euro zone credit crisis."

Banks, which are hit hard this year following their significant exposure to peripheral euro zone economies, featured among the top gainers, with the STOXX Europe 600 baking index up more than 3 percent. But the index is still down nearly 33 percent so far this year.