PARIS, Feb 29 (Reuters) - European stocks climbed early on Wednesday, keeping their 2-1/2 month rally alive as investors bet the European Central Bank's new funding operation will ease tensions in the banking sector and boost appetite for risky assets such as equities.
At 0802 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent at 1,078.77 points.
"Today's LTRO, as well as the Dow closing above 13,000 points last night, is boosting confidence," said Guillaume Dumans, derivatives trader and co-head of 2Bremans, a Paris-based research firm using behavioural finance to monitor investor sentiment.
"The day's trend is positive. Our daily sentiment indicator reflected that this morning."
Banking stocks gained ground, with Natixis up 1.2 percent and Bankinter up 1.7 percent, ahead of the results of the ECB's second long-term refinancing operation at around 1020 GMT.