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European techs lead market rally

"With no bad news around, there is a little bit of momentum, but I would not look at a big move."

David Buik, an analyst with Cantor Index

European blue chips rose on Friday, led by a rally in technology stocks as investors welcomed a bullish revenue update by Intel Corp, while US jobs data and softer oil prices boosted Wall Street.

European markets have been trapped within recent tight ranges as investors focused on oil prices and the US Federal Reserve's interest rate-setting meeting at the end of the month amid a dearth of corporate news.

"The market seems to be prepared to take a little bit of risk. Oil has fallen nicely and the US payrolls number is more or less in line, but the threat of geopolitical factors is still in the background," said David Buik of spread-betters Cantor Index.

"There are not any major factors that the markets can latch onto. With no bad news around, there is a little bit of momentum, but I would not look at a big move," he said. The FTSE Eurotop 300 index of pan-European blue chips finished 0.6 percent higher at 992.93 points -- the highest close since May 10. The narrower DJ Euro Stoxx 50 index rallied 1.14 percent to 2,767.87.

Both indices ended near their highest levels in the session and analysts said attractive stock valuations would lure investors.

"A positive macroeconomic backdrop and strong corporate earnings have been rewarded by investors with higher discount rates; markets have been range-bound. We expect that valuation will soon command investor attention again," JP Morgan strategists said in a note.

"Higher share prices will follow, in our view, particularly for the more cyclically geared corporates."

Chip-related stocks such as STMicroelectronics and ASML surged after Intel narrowed the range of its quarterly revenue forecast to the upper end of its outlook, citing better-than-expected demand for flash memory chips.

Other tech stocks also benefited, with mobile phone giant Nokia up three percent while networks firm Ericsson put on 3.4 percent.

But energy stocks were among the major losers, hit by selling after oil cartel OPEC decided on Thursday to open its supply taps to cap runaway oil prices.

Oil giants BP and Royal Dutch/Shell closed between 0.4 and 0.9 percent lower.

Gainers included Adecco SA which climbed 2.6 percent to 63.80 Swiss francs after it said its Executive Chairman John Bowmer will quit at the end of the month, as the staffing firm attempted to draw a line under a damaging book-keeping flap that has dogged it this year.

The jobs report in the US added to evidence of accelerating economic activity and reinforced expectations that Federal Reserve policymakers will ratchet US interest rates up from their current 46-year lows when they meet on June 29 and 30.

"The numbers are a bit stronger than expected but what really catches the eye are the revisions to the previous two months," said John Shepperd, global economist at Dresdner Kleinwort Wasserstein.

"We think European stock markets have fully discounted rate changes," he said.
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