European shares ended at three-week highs in holiday-thinned volumes yesterday as oil prices holding above $50 a barrel lifted oil heavyweights and miners like BHP Billiton rose on the back of a broker upgrade. Technology issues were also buoyant, with chipmaker Infineon up four per cent after South Korea's Hynix gave an upbeat outlook for the second half of the year.

Other movers included Philips, up 1.2 per cent on news of a book gain of up to €750 million from the sale of its stake in NAVTEQ, but sales growth concerns skimmed 6.6 per cent off Imperial Chemical Industries.

By 1545 GMT, the FTSEurofirst 300 index of pan-European blue chips had gained 0.55 per cent, ending unofficially at 1,080.9 points - its best close since April 15. The narrower DJ Euro Stoxx 50 index added 0.8 per cent to 3,004.

The FTSEurofirst index has rebounded 2.6 per cent from a three-month trough hit on April 29, but it remains more than two per cent below the multi-month highs set a month ago as worries about the strength of the global economy sap sentiment.

A mixed batch of US economic numbers yesterday showed business productivity growth had accelerated unexpectedly in the first quarter but labour costs had also picked up, while weekly jobless claims had also risen more sharply than expected.

Investors had their eyes set on today's US employment data for April, a key driver of market sentiment in recent months. Economists expect the US job market to have improved in April but the economy is still generating barely enough work to absorb new entrants into the labour pool.

But some market watchers played down worries about the economic slowdown.

"Markets went into panic mode last month as worries over a global slowdown re-emerged," Deutsche Bank said in a note.

"While the data has been soft, we attribute a good part of this to the Q1 surge in the oil price. As this unwinds we think the data will improve and investors' concerns ease."