A big leap in US payrolls put a spring in the step of European investors yesterday, sending shares back up to last month's levels before the Madrid bombings sent markets tumbling.
Wall Street also climbed from the opening bell. Yesterday's rally in Europe was broadly based, although economy-sensitive producers of commodities, autos and chemicals, along with technology stocks and insurers were the strongest.
Among the top advancers, insurers Aegon, ING and Axa rose between three and six per cent. Technology leader Nokia gained nearly four per cent, while Philips Electronics was up 3.7 per cent.
With a renewed taste for riskier areas such as technology, investors pulled out defensive shares, with drug stocks GlaxoSmithKline and AstraZeneca both down, along with supermarket giant Carrefour.
The FTSE Eurotop 300 index of pan-European blue chips jumped back over the psychologically important 1,000 point mark and was up 1.5 per cent at 1,008 points by 1448 GMT.
The index is now roughly where it was before a slide on March 11 following bombings that killed nearly 200 commuters in the Spanish capital.
The Eurotop 300 was heading for its highest close since March 10. The US economy has been in recovery mode for many months, but until yesterday there were few signs that companies were willing to take on more staff, which was needed to keep investors' confidence buoyant.
"We were all waiting for a blow-out number as it was the last leg of the economy to do well, and it did," said Lex Werkheim of Eureffect asset management in Amsterdam.
Non-farm payrolls climbed 308,000 in March, the biggest gain since April 2000 and nearly triple the 103,000 rise expected on Wall Street, though there were unofficial expectations it would be higher than this.
"It's more than you could wish for, and it could mean interest rates have reached a bottom. We see a positive outlook for stocks," Mr Werkheim said.
"This will certainly have a very positive effect on sentiment, but it's not the only factor," he said, adding that security would remain a concern for investors.
An example of this was news that the dynamite found on a Spanish railway line yesterday was, according to a Spanish state radio report, the same type as that used in the deadly March railway bombings in the capital.
On Wall Street the Dow Jones industrial average was up 0.8 per cent at 10,464 points, while the Nasdaq Composite gained 1.6 per cent to 2,048 points.