Eurostocks surge on dollar recovery

European shares soared by midday as exporters cheered the dollar's rise against the euro and investors in beat-up tech, telecom and media stocks hoped for signs of US expansion in upcoming labour market data.

"The dollar has strengthened notably versus the euro in the past week, which will undoubtedly help provide a well-needed boost to European profits," said Martin Brooker, a pan-European strategist at E*Trade Securities.

Among standout risers Spanish oil major Repsol YPF gained over eight per cent after a company executive reportedly said the group expects to reduce debt sooner than expected because of a stronger euro and recent asset sales.

New York markets were closed on Thursday for the US Independence Day holiday but US stock index futures pointed to solid gains when the market reopens for half a day's trading.

At 1124 GMT, The FTSE Eurotop 300 index of European blue chips rose 2.34 per cent, rallying for the second straight session.

But the benchmark is still trading near nine month lows, having been battered in recent weeks by a combination of fears over accounting irregularities and concerns profits are not recovering as quickly as expected.

Meanwhile the narrower DJ Euro Stoxx 50 index added 3.23 per cent.

The jury is out on whether shares have further to fall or are close to establishing a bottom, with the answer dependent on the collective state of mind of investors and their readiness to begin committing fresh funds to the market.

Michael Joynson, business director in European Equities at Invesco Asset Management said: "Equities have fallen a long way in a short period of time so we're naturally seeing a technical bounceback but, having said that, investor confidence is still shot out.

"Fund flows in May were still just about positive but most of the money's going into cash at the moment and will remain there until confidence is restored. That will take some time."

News cash-strapped German engineering firm Babcock Borsig had filed for insolvency was a reminder of the still-difficult business conditions.

The greenback rose to a 10-day high against the euro, around 2.5 per cent above last week's two-year low close to parity with the single currency. Some 20 per cent of direct sales of companies in the FTSE Eurotop are exposed to the US currency.

Research from investment bank HSBC showed recently that Eurotop 300 companies with US sales exposure of 70 per cent or more include Shire Pharmaceuticals, food retailer Delhaize, fund manager Amvescap, eyewear group Luxottica, and media firm Pearson.

France Telecom jumped 12 per cent on continued hopes the French government would step in to help the group deal with its 61 billion euro debt pile.

Also performing strongly was similarly-indebted German peer Deutsche Telekom, which rose 7.9 pervcent.

Telecom equipment stocks gained ground. Finland's Nokia was up 6.2 per cent and Sweden's Ericsson added 6.4 per cent.

Ericsson was helped by an upgraded from investment bank Schroder Salomon Smith Barney to 'neutral'.

German chip maker Infineon Technologies blazed a trail for the tech sector, surging 7.8 per cent after broker Merrill Lynch reiterated its 'strong buy' rating of the stock.

A recovery in Asian DRAM memory chip prices was also seen as supportive.

Meanwhile, Vivendi Universal's rollercoaster ride continued, with the stock up 7.9 per cent on hopes the firm's new bosses will solve the French media giant's chronic liquidity problems.

The shares rose 5.5 per cent on Thursday but shed 36 per cent earlier in the week, before the appointment of a new management team seen better able to secure fresh funding from creditors.

Specialist materials firm Cookson rose 18.4 per cent after signalling it could stand the heat from the troubled computer, mobile phone and steel industries which it supplies.

The closely-watched US labour market report is released at 1230 GMT.

Economists polled by Reuters expect June non-farm payrolls to rise by 86,000 after a 41,000 jump in May. The US unemployment rate is seen climbing to 5.9 per cent from 5.8 per cent, with average hourly earnings jumping by 0.3 per cent.