European shares hit a two-week closing high yesterday after data showed US employers cut a far fewer-than-expected 11,000 jobs in November, with banks rebounding from earlier falls and featuring among top gainers.
The pan-European FTSEurofirst 300 index of top shares closed up 1.1 per cent at 1,025.77 points.
The index has gained 2.9 per cent this week after two weeks of losses. It is up 23 per cent in 2009 and has surged 59 per cent since hitting a record low in early March.
"It is fantastic. It is positive for the wider economy and everyone is coming in to buy equities," said Joshua Raymond, market strategist at City Index, referring to the jobs data.
"It was about 10 times less than what the market was expecting. It gives a strong signal that the US jobs market is now in recovery mode."
The US government data strongly suggested the deterioration in the labour market was in its final stages. The Labour Department said the unemployment rate fell to 10 per cent from a 26-and-a- half-year high of 10.2 per cent in October.
Banks were among the top gainers, with Banco Santander, UBS and Société Générale and up 1.1 to 2.2 per cent.
Across Europe, the FTSE 100 index was up 0.2 per cent, Germany's DAX was 0.8 per cent higher and France's CAC 40 gained 1.3 per cent.
Energy stocks were big sector movers, with BP, Royal Dutch Shell and Total gaining 0.4 to two per cent.
Recruiters were in demand. Dutch staffing company Randstad soared 7.7 per cent after it said its revenue trend continued to improve and US staffing operations returned to growth.
"This gives more ammunition to take a bet the recovery will materialise. If that happens, Randstad will be one of the first to benefit," Keijser Capital trader Geoffry Leloux said.
Adecco and Michael Page were up 7.7 per cent and 3.4 per cent respectively.
Defensive stocks were higher, with drugmakers featuring among the top gainers. AstraZeneca was up 2.6 per cent after its schizophrenia drug Seroquel XR won US approval as an add-on treatment for depression.
GlaxoSmithKline, Roche and Sanofi-Aventis were one to 2.2 per cent higher.
Miners fell from earlier gains after gold slipped below $1,190 an ounce. Anglo American, Antofagasta, BHP Billiton, Rio Tinto and Xstrata were down 1.6 to 3.4 per cent.
Back to economic news, inventories at US factories increased for the first time in more than a year in October, while factory orders also rose an unexpected 0.6 per cent, the Commerce Department said yesterday, in signs the manufacturing sector is returning to health.