2:20 PM Frankfurt – The European indexes gained for the second day and jobless rate rose in May and UK home prices stagnated in June. Linde agreed to acquire U.S.-based Lincare for $4.6 billion and Essar Energy agreed to sell stake in Vietnam gas block to ENI.

European markets extended Friday’s gains on the optimism after regional leaders took emergency steps and offered direct lending to banks easing stress in the sovereign bond markets of Spain and Italy.

However, analysts are cautious and investors are looking for details of the new bank lending rules and the plans for the launch of regional banking authority.

French economic growth estimated to weaken in 2012 and 2013. Mixed manufacturing activity was reported in the euro area with the German PMI falling to a three-year low in June.

The French economic growth is estimated to be weaker in 2012 and 2013, Finance Minister Pierre Moscovici told Figaro newspaper in an interview.

Moscovici said the economic growth may reach around 0.4% in 2012 and an expansion within 1% to 1.3% appears ""more credible"" in 2013.

In Paris trading, the CAC-40 Index gained 35.63 or 1.1% to 3,232.28 and in Frankfurt the DAX Index edged higher 61.49 or 1% to 6,478.22.

The yield on 10-year bonds of Spain dropped 10 basis points to 6.185% and Italian bonds declined nine basis points to 5.70%.

Euro-zone Jobless Rate Rises

The euro-zone unemployment rate rose to a record 11.1% in May from 11% in April, Eurostat said today.

The number of unemployed increased 88,000 in May from the previous month and on a yearly basis, unemployment surged by 1.82 million.

The unemployment rate in the larger region of EU27 was 10.3% in May compared to 10.2% in April with Spain reporting the highest jobless rate of 24.6% followed by Greece with 21.9%.

Euro Area, German, French PMI Data

The Eurozone Purchasing Managers'' Index for the manufacturing sector remained unchanged in June from the prior month, final data from Markit Economics showed.

The index was flat at 45.1 in June but above the flash reading of 44.8.

The final seasonally adjusted Markit/BME Germany Purchasing Managers'' Index fell to 45.0 in June from 45.2 in May, its lowest reading for three years, results of survey by Markit Economics showed today.

Separately, the seasonally adjusted purchasing managers'' index for the French manufacturing sector dipped to 45.2 in June, lower than 45.3 in the flash estimates.

UK Home Prices Flat, PMI Climbs

Home prices in the UK remained unchanged in June compared to the previous month, the latest survey by Hometrack showed.

The number of first time home buyers fell 0.5% in June, marking the first drop in five months.