European stocks rally as ECB holds surprise meeting

(Reuters) - European stocks rallied in early trade on Wednesday, after a spokesperson of the European Central Bank said its rate-setting Governing Council would hold an unscheduled meeting to discuss the recent sell-off in government bond markets.

An index of euro zone shares climbed 1.3% by 0706 GMT, while the pan-European STOXX 600 index added 0.8%.

Italian bank stocks, which have taken a hit recently on fears about Rome's surging debt costs, rallied.

Shares of Unicredit, Intesa Sanpaolo and BPER Banca rose between 4.5% and 6.5%, while the broader Italian banking index climbed 6.4%.

Euro zone banks have fallen sharply in the past week, hit by a selloff in southern European bond markets after the ECB said last week it saw no need to create a new tool to help weaker economies cope with rising borrowing costs as it ends bond buying and looks to hike rates.

The ECB's surprise meeting was scheduled for 0900 GMT but it was not yet clear whether a statement would be published, several sources with direct knowledge said.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich)