LONDON (Reuters) - European markets chalked up their biggest gains in five months Thursday as stocks bounced back from recent weakness and Wall Street rallied in opening trade.

The FTSE Eurotop 300 index climbed 5.7 percent to 722 points -- its biggest one-day percentage gain since mid-October. It fell 3.4 percent on Wednesday to close at its weakest level since mid-December 1996.

"For the time being I would characterize this as a savage, bear market rally,'' said Richard Champion, a European fund manager at Pavilion Asset Management.

London's FTSE 100 benchmark index jumped 199.9 points to 3,486.9, the biggest one-day percentage gain in more than 15 years. Total volume was a hefty 3.2 billion shares.

Investors put aside the latest weak U.S. economic reports and worries about war as the United Nations Security Council showed signs of delaying any move on a new resolution on Iraq, at least until next week. (For full coverage from CNN.com, click here).

The U.S. State Department denied reports that some Iraqi officials were in surrender talks. The rumor had helped to trigger a surge in the dollar and profit-taking in safe-haven assets such as Treasury bonds and gold.

The stock rally was strong and broad-based, with winners topping losers by a 20 to 1 margin, with media, insurance, telecoms and banks the strongest.

The Eurotop 300 has fallen in each of the past three years and is still down nearly 16 percent for 2003.

Analysts said the stronger dollar and Wednesday's late turnaround on Wall Street -- followed through by a rally Thursday -- coupled with investors pulling out of gold and pricey government bonds, should underpin equities for now.

But few read more into the rally than an overdue bounce on the charts.

"We still have got some serious fundamental problems in the global economy and it's going to be difficult for the market to move ahead consistently without solving them,'' Champion said.

The DJ Euro Stoxx 50 index rose 6.3 percent to 1,967 points. London's FTSE index jumped 6.08 percent, the CAC-40 in Paris climbed 6.31 percent, and Frankfurt's DAX index added 5.59 percent.

On Wall Street, the Dow Jones industrial average and the tech-laden Nasdaq composite both gained about 1 percent. Treasury bonds tumbled while the dollar rallied. Gold prices fell. (For more on the U.S. markets, click here).

Among individual issues, the insurer Fortis jumped 20 percent after reporting 2002 profits that beat expectations, giving a lift to the battered insurance sector. Aegon rose 13 percent while Dutch financial group ING added 12.6 percent.

Deutsche Telekom rose 6.7 percent, rebounding from heavy selling earlier in the week.

There were some casualties, however.

Shares in Anglo-Dutch metal producer Corus sank 22 percent in Amsterdam after it announced it will abandon the 750 million ($815 million) sale of aluminum production assets.