Milan, May 7 - European stock markets recorded gains Tuesday, led by a small rally on Italy's major financial market which managed to break the 17,000 mark. On the Milan Stock Exchange, the FTSE Mib rose by 1.54% in trading to end the day at 17,121 points, passing a psychologically important barrier for traders. Meanwhile, the spread between Italian and German debt, an indicator of investor confidence in Italian government paper, reached 257 basis points at close of trading on Tuesday, slightly lower than Monday's closing spread of 267 basis points. The yield on 10-year Treasury bonds was 3.85% Tuesday, down slightly from the previous day's close of 3.91%. Market sentiment in Europe was boosted after Portugal issued 10-year government bonds for the first time since it received a bailout two years ago. Banking shares were also higher following a positive financial report from giant HSBC, Europe's biggest bank by market value. It reported that profits more than doubled in the first quarter as the bank benefited from recent restructuring efforts, and booked fewer bad loans. Most other European equity markets also recorded significant gains during the day. Frankfurt's DAX rose by 0.86% to reach 8,181.78 points, while Paris's CAC 40 rose by 0.37% to close at 3,921.32 points, and London's FTSE 100 ended the trading day 0.55% higher, closing at 6,557.30. Spain's IBEX 35 also closed trading on a positive note, ending the day 0.47% higher at 8,544 points.