European stock exchanges surged on Friday following the release in Washington of a report on US job creation last month that far exceeded expectations. The London FTSE 100 index added 0.89 percent to close at 5,907.9, its best showing since June 8, 2001.
In Paris the CAC 40 index rose 1.23 percent to 5,069.27 while in Frankfurt the DAX jumped 1.27 percent to 5,804.92.
The Euro STOXX 50 index of leading eurozone shares added 1.08 percent to close at 3,798.46.
European shares started the day lower as investors showed caution ahead of the US employment data, but bourses turned swiftly higher when non-farm payrolls increased 243,000, topping the 206,000 consensus forecast of economists.
The data also showed that the US jobless rate ticked back to 4.8 percent last month from a five-year low of 4.7 percent in January.
US shares saw strong gains after the employment report.
Banks were among the movers in Europe on merger and acquisition speculation. Societe Generale surged 4.8 percent in Paris following a report linking it to a bid from Citigroup.
The French magazine Le Nouvel Observateur reported that a large US bank, which the magazine believed to be Citigroup, had contacted the French government about a possible bid for a French bank. The report speculated Societe Generale would be first in line for a bid. Citigroup and Societe Generale declined to comment.
Deutsche Bank, another bank that in the past has been linked with Citigroup, rose 3.4 percent.
Italy's Capitalia SpA added 2.4 percent on speculation that it could be in line for a bid from rival Banca Intesa. The Il Sole 24 Ore newspaper said a merger between the banks could happen shortly, ahead of the general election next month, though Capitalia said it was not in merger talks.
Shares in Banca Intesa also rose around 2 percent in Milan.
"Italian M&A looks more like an unpredictable game of chess rather than a boring game of dominoes," analysts at Credit Suisse said.
The euro in late-day trade was at US$1.1885 after US$1.1907 late on Thursday in New York.
Jim Awad, chairman of Awad Asset Management, said that the hesitant opening had been a result of a "tug of war" between those who see strong economic growth as positive for corporate profits and those who fear inflation.
"The case is here that we have a strong economy, we're creating jobs, wages are going up. That means for the time being corporate profits are in good shape" he said.
Awad said that the negative side of the jobs data was that it raised the risk that the Fed is going to have to raise rates over a longer-than-expected period, increasing the risk at some point down the road that they will begin to affect the economy negatively.
In London airport operator BAA rebounded from losses on Thursday and added 5.03 percent to reach ?8.14 on reports that it remained a possible takeover target for Spanish group Ferrovial.
Retailer Tesco also clawed back lost ground, gaining 2.13 percent to close at ?3.36. The share suffered on Thursday on news that British competition authorities planned to investigate the groceries sector following complaints of market dominance by Tesco and three other groups.
The mining sector was well-supported, with BHP Billiton adding 1.57 percent to reach ?9.3750, while Rio Tinto climbed 1.72 percent to ?26.68.
In Paris the Societe Generale bank shot up 4.80 percent to 120 euros, taking advantage of reports that it might be an acquisition target for Citigroup, the largest US bank.
Power group Suez rose 0.98 percent to 34.17 euros, while GDF slipped 0.38 percent to 29.06 euros, both companies having been little affected by warnings from Belgian authorities that their merger would create serious competition problems there.
Automaker Volkswagen edged up 0.50 percent to 55.98 euros in Frankfurt despite negative comments from Merrill Lynch.
Elsewhere there were gains of 0.97 percent to 3,901.67 on the BEL 20 in Brussels, 0.62 percent to 11,771.8 on the IBEX-35 in Madrid, 0.72 percent to 37,927 in the SP/MIB in Milan, 1.4 percent to 7,970.64 on the Swiss Market Index and 0.92 percent to 458.59 on the AEX in Amsterdam.
On Friday, the Tokyo Stock Exchange's benchmark NIKKEI-225 index rose 0.49 percent to end at 16,115.63 points.
Hong Kong's key Hang Seng Index finished down 0.42 percent at 15,445.05 points on Friday as investors remained cautious owing to interest-rate worries and ahead of key US employment data later in the day, dealers said.
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