Deutsche Bank, buoyed by renewed takeover talk, led European shares to a fresh near 20-month closing high yesterday, but trading remained cautious as investors awaited key US jobs data today.

Linde, the German industrial gases and engineering group, was another standout mover, up 4.5 per cent on hopes the company will sell its refrigeration business.

But UK retail giant Marks & Spencer was a sore spot, shedding 3.3 per cent as analysts doubted the man the company named as the new head of its main clothing business was the right one to revitalise its struggling clothing range.

The FTSE Eurotop 300 index of pan-European blue chips ended 0.4 per cent higher at 1,025.41 points - its highest closing level since July 10, 2002 - and bringing to seven per cent its gains since the start of the year.

Strategists said more gains would be in the offing for equity markets if solid job numbers today can encourage US consumers to keep spending to sustain the economic recovery.

"Household's job situation and spending remain a key engine of the recovery, explaining why markets will be focusing on tomorrow's data," said fund manager Yves Maillot from Robeco Gestion.

A report published yesterday showed weekly US jobless claims declined by 7,000 to 345,000 as expected, shedding little light on today's much-awaited monthly employment report.

The narrower DJ Euro Stoxx 50 index closed 0.9 per cent higher at 2,952.6 points.