(Reuters) - European equities notched up solid gains on Tuesday, boosted by expectations that the euro zone is moving closer to putting its rescue fund into action and with thin, summer holiday volumes exaggerating market moves.
Germany's top court convened to discuss whether the EU bailout is compatible with national laws, with Finance Minister Wolfgang Schaeuble warning of dire consequences if the scheme faces a significant delay.
Although no decision is expected on Tuesday, investors were hopeful of an approval, and Spanish and Italian bond yields dipped.
"The periphery bond markets are in slightly better form. The constitutional court is sitting (and markets are) heading into supposed 'risk on' and excitement," said Stewart Richardson, chief investment officer at RMG, although he advised treating such market moves with caution as sentiment can quickly reverse.
The FTSEurofirst 300 .FTEU3 provisionally closed up 1 percent at 1,040.79 points. Trading volume stood at only 68 percent of the 90-day daily average.
(Reporting by Toni Vorobyova and Tricia Wright; editing by Simon Jessop)
