The Dow Jones Stoxx 50 and Stoxx 600 indexes had their largest weekly gains in 11 amid optimism economic growth in the US will boost the profits of Europe's exporters.
Royal Philips Electronics NV and Bayer AG paced the climb.
Both get about 30 percent of their revenue from the US, Europe's largest export market.
The Stoxx 50 added 52.27, or 2.2 percent, to 2408.18 in London. The Stoxx 600 rose 2.3 percent to 204.41. Both benchmarks gained 4 percent this week, their biggest jumps since the five days ended March 21, and are at their highest since Jan. 16.
"We are fully invested, but if I had money I would buy shares," said Klaus Hagedorn, who manages US$700 million at Metzler Investment GmbH in Frankfurt. "We are on the launch pad of an economic recovery."
The US "economy and marketplace are getting better, and shares could go significantly higher," said Mike Bayer, who manages US$216 million of assets at Ceros Vermoegensverwaltung in Frankfurt. Bayer, who increased his holdings a couple of weeks ago, said he would buy more shares if "more companies get optimistic."
Benchmark indexes climbed in all of the 17 Western European markets this week. Germany's DAX Index has risen 4.9 percent, France's CAC 40 Index gained 3.4 percent and the UK's FTSE 100 Index advanced 2.5 percent.
June futures on the Euro Stoxx 50 Index of companies based in the euro region yesterday added 2.6 percent to 2420. The index added 2.4 percent to 2421.92.
The dollar had its biggest gain against the euro in two months Friday, rising to US$1.1716 per euro from US$1.1844 in New York the day before. A stronger dollar can increase the value of sales that European companies make in the US and make their exports more competitive.
Philips, Europe's largest maker of consumer electronics, jumped 9.6 percent this week. Bayer, the region's third-biggest chemical company, added 8.4 percent.
Canary Wharf Group Plc, builder of a London office park whose tenants include Citigroup Inc, led Stoxx 600 gains this week, surging 46 percent to ?2.63. The company yesterday said it has been approached by several parties about a possible takeover bid.
Corus Group Plc, Europe's third-biggest steelmaker, jumped 23 percent since last Friday to ?0.1959. The company on Wednesday said its banks are closer to agreeing on a new credit line, which it needs to survive after losing ?2 billion (US$3.3 billion) in four years.
SAP AG, the world's biggest maker of business-management software, surged 8.8 percent to 107.09 euros yesterday, extending its weekly gain to 11 percent.
Smaller rival Oracle Corp said it will begin a cash tender offer to buy PeopleSoft Inc for about US$5.1 billion. Oracle Chief Executive Larry Ellison has said the software industry will consolidate, and that only Oracle and SAP will be left in the business-software market.
European drugmakers gained yesterday after two US senators agreed on a bill that would expand prescription-drug coverage for Medicare patients, potentially boosting sales for pharmaceutical companies.
AstraZeneca Plc, Europe's second-largest drugmaker, climbed 4.8 percent to ?26.94 yesterday, for a weekly rise of 8.9 percent. GlaxoSmithKline Plc, the No. 2 in the world, advanced 0.6 percent to ?12.58, extending its five-day gain to 4.4 percent.
Both get about half of their revenue from the US.
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