Hopes for pleasing earnings in the looming reporting season hoisted European shares to their highest close in four weeks yesterday, with economy-sensitive technology stocks such as SAP leading the march up.

Heavily-weighted oils BP, Total and BG Group also lent strong support to the market as crude prices steadied after heavy losses last week.

Other standouts included UK supermarket chain Sainsbury, up four per cent after the Observer newspaper on Sunday said US private equity firm Kohlberg Kravis Roberts & Co was mulling a takeover offer for the group, even though a source told Reuters that KKR was not interested in making a bid.

The FTSE Eurotop 300 index of pan-European blue chips ended 0.7 per cent higher at around 1,017.8 points, rebounding after a seven-per cent downturn triggered by deadly train bombings in Madrid last month and a string of disappointing economic data.

The narrower DJ Euro Stoxx 50 index climbed 0.7 per cent to end around 2,905.9 points.

Strategists said markets could soon recapture 20-month highs set at the start of last month after last Friday's surprisingly strong US jobs report - which showed employment growing at its fastest pace in almost four years last month - reassured investors that the economy could finally create enough jobs to keep consumer confidence buoyed.

Another report, showing yesterday that the US services sector had grown well above expectations to hit a record high last month, also helped to ease worries over the sustainability of the economic recovery.