Eurostocks end up on US data

European equities closed at fresh six-month highs yesterday after stellar job growth in the US boosted investors' sentiment and powered gains in tech issues such as mobile phone maker Nokia.

But the market's advance was clipped after the euro hit a record high against the dollar above $1.2927 and dampened the outlook for regional exporters.

Cheaper oil gave a lift to British Airways, which rose 4.2 per cent, while no-frills carrier easyJet gained 2.8 per cent supported by robust passenger traffic last month.

By 1650 GMT, the FTSE Eurofirst 300 was 0.44 per cent higher at an unofficial close of 1,021.08 points but below the intra-day high of 1,027.60 points. The index rose 2.3 per cent on the week.

US data showed 337,000 jobs were added to payrolls last month - twice the 169,000 that economists had forecast, the sharpest rate in seven months, which boosted Wall Street.

"It is great news for equities. Evidence that the US economy is weathering the oil price effect reasonably well will be the dominant factor and outweigh worries that the Fed will raise rates," said Kevin Grice, senior economist at American Express Bank in London.

Around Europe, the FTSE 100 index in London rose 0.24 per cent, the German DAX gained 0.55 per cent and the Paris CAC-40 was up 0.49 per cent.

Strategists, however, said European markets were not set for a big rally from current levels because a strong euro was dampening the outlook for regional exporters, while investors awaited key earnings reports due next week.

Earnings from telecoms, airlines and oil groups will command attention next week, with scorecards due from BT, British Airways, Total and Enel.

The DJ Euro Stoxx 50 index put on 0.4 per cent to 2,871.1 points.

"Investors' stance is more towards larger, safer sectors which have domestic earnings and in areas like telecoms, utilities and banks," said Michael O'Sullivan, a strategist at State Street Global Advisors.

"The earnings season hasn't been bright but not poor either. However, one of the problems is that lot of companies which have reported have given weaker outlooks for next quarter."

The DJ Stoxx utility sector is the best performer so far this year, up 22 per cent. The oil and gas sector is up 14 per cent as soaring oil prices boosts profit growth for firms.

Economy-sensitive tech stocks rose yesterday, with Nokia up 1.8 per cent and Dutch chip maker ASML up four per cent.

Oil groups BP and Shell, however, tracked a decline in crude which fell to five-week lows.

The US non-farm payrolls data came just ahead of the Federal Reserve's meeting on Wednesday, when it is widely expected to raise its federal funds rate by 25 basis points to two per cent.

The strong data raised fears that the Fed was less likely to halt its current rate-rising cycle after next week, which many had speculated before the report.