European stocks extended their gains around midday on Friday, reversing a big portion of the losses suffered in the past three days, as comments from an ECB official rekindled expectations of bold action from the central bank to fight the debt crisis.

At 12:53 SA time, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,086.58 points, while the euro zone's blue chip Euro STOXX 50 index was up 1.4 percent at 2,438.24 points after breaking above a short-term descending trendline which sent a bullish technical signal.

ECB Executive Board member Benoit Coeure said on Friday the central bank bond purchases in the sovereign debt market must be subject to strict conditionality, adding that in his view this meant a programme with the euro zone's EFSF and ESM bailout funds.

“It adds to the belief that there is going to be some action from the ECB. Bringing down borrowing costs is important, but at the same time you need to have a clear strategy for longer term growth,” said Angus Campbell, head of sales at Capital Spreads.

Traders also cited earlier comments from Michel Barnier, EU's top regulatory official, outlining plans to grant the European Central Bank sweeping powers to monitor all euro zone banks, as supportive.

Markus Huber, a senior trader at ETX Capital, said: “If the ECB has all the powers they might not be as independent anymore because they might feel forced to rescue the Spanish banks and then have to buy bonds and so on. Independence could be lost but any rescue could be easier in the future.” - Reuters