European shares closed higher on Friday as initial disappointment at softer-than-expected US jobs data was offset by optimism that interest rates will remain low for longer, helping profit growth remain on track.
Strong results from telecoms equipment maker Ericsson provided a boost for technology stocks, helping snap a three-day losing streak for pan-European bourses.
Having ridden the back of rally in techs, media stocks and telecoms in the first few weeks of the year, European indexes have stalled in recent sessions as investors demand more good news to extend gains.
"We're expecting markets to continue to move gently higher over the next two to three months, but it is getting harder and harder to make progress, basically because sentiment is at such high levels already," said Jason James, HSBC global strategist.
The FTSE Eurotop 300 index of pan-European blue chips closed up 0.6 percent at 982.2 points, improving from a three-week low of 976.7 points hit on Thursday.
Turnover was a hefty 3.9 billion euros, and gainers outnumbered decliners by about five to three.
The narrower DJ Euro Stoxx 50 index ended 0.6 percent higher at 2,833.6 points.
Jobs created, slowly
Traders initially marked down European shares after US non-farm payrolls rose 112,000 in January, below expectations of 150,000 but higher than December's upwardly revised 16,000.
The data sent the dollar tumbling, down a cent and a half against the euro, but stocks rebounded on expectations the Federal Reserve would be happy to keep rates on hold for a longer period.
"Although it is a bit disappointing -- not to say surprising -- that the US job market is not improving faster, it does mean the Fed will be more comfortable with rates steady until probably 2005.
The one major concern here is the dollar," one London-based trader said.
Investors, worried about the damage to European exports and profits from the weak dollar, will be watching to see if a meeting of the Gr7 finance ministers will act to halt the slide.
Currency strategists think that is unlikely before a US Presidential election in November and given the need to ensure that the US economic recovery does become an expansion.
"If they don't do anything about euro appreciation, then that is a concern for continental European stock markets," said Nigel Richardson, senior strategist at Axa Investment Managers.
On Wall Street, the Dow Jones Industrial Average was up 0.6 percent at 10,557.6 points, while the tech-laden NASDAQ Composite jumped 1.4 percent to 2,048.7 points by 1715 GMT.
Around Europe, London's FTSE 100 and Paris' CAC-40 both closed 0.4 percent higher, while Zurich's SMI rose 0.9 percent and Frankfurt's DAX closed 0.8 percent firmer.
Ericsson soars
Sweden's Ericsson surged 11.8 percent to a near two-year high after posting much better-than-expected fourth-quarter profits.
Techs rallied after Ericsson raised its guidance for this year, and positive outlooks from British insurer Aviva, security firm Securitas and lock-maker Assa Abloy also helped push up the market.
Aviva rose 6.7 percent after saying last year's operating profit was likely to beat forecasts following a strong performance from its life and general assurance operations in the second half.
Securitas, the world's largest security services company, ended 14.7 percent firmer after its fourth-quarter profit beat forecasts, while Assa Abloy gained 6.6 percent after its results.
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