European shares closed at a seven-week high yesterday as equities shook off two straight sessions of losses, with banks rallying and oil majors supported by firmer crude prices.

The pan-European FTSEurofirst 300 index of top shares closed up 0.6 per cent at 1,058.81 points, its highest closing level since January 19. The index, which has gained 57 per cent since reaching a lifetime low in March last year, is up 1.2 per cent so far this year.

Banks were higher, with HSBC, Société Générale, BNP Paribas , UBS and Deutsche Bank up 0.4 to 2.7 per cent. Greek banks were up almost four per cent.

Barclays gained 0.6 per cent. The bank was said to be looking to buy a retail bank in the US to extend its presence after acquiring Lehman Brothers' North American operations in 2008, the Wall Street Journal reported.

Analysts said investors' confidence in equities was partly driven by positive economic data from the US, notably the better-than-expected non-farm payrolls numbers in February, which reinforced the view that the economy was recovering.

"The news from the US has generally been quite encouraging on the jobs front. It seems to have been enough to have drawn a lot of people into the market who were waiting for some confirmation of further activity," said Geoff Wilkinson, head of investment research at Mint.

Energy shares were higher, supported by a rally in crude prices, which rose more than $1 to nearly $83 a barrel after as stocks of the motor fuel in the United States dropped unexpectedly.

BP, BG, Royal Dutch Shell, Total and Repsol rose 0.9 to 1.5 per cent.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 rose 0.7 to 0.9 per cent.

Mining stocks were also higher, with metals prices supported by better-than-expected Chinese imports data, which raised hopes of a global economic recovery.