LONDON; European stock markets rose on Friday after the White House suggested the US economy had pulled back from the brink following a key US unemployment report that showed the number of job losses slowed in July.
The data showed the unemployment rate fell unexpectedly to 9.4 percent as job losses in the month narrowed to 247,000. Private economists had forecast the rate rising to 9.6 percent and a loss of 325,000 jobs.
The report "brought positive surprises all around," said Patrick O'Hare of Briefing.com, a Chicago-based market analysis company.
O'Hare said the new figures would "engender confidence in the idea that the worst of the downturn is over."
Some economists however warned that the drop in the rate was due to a drop in the labour force and unemployment numbers could still worsen in the future.
London's FTSE 100 index of leading shares gained 0.87 percent to close at 4,731.56 points, the Paris CAC 40 rallied 1.24 percent to 3,521.14 points and the Frankfurt Dax jumped 1.66 percent to 5,458.96 points.
Elsewhere in Europe, Milan finished 1.30 percent up, Madrid gained 1.59 percent, Brussels rose 1.16 percent and Geneva won 0.98 percent.
On Wall Street, the Dow Jones Industrial Average was up 1.33 percent in afternoon trading and the tech-heavy Nasdaq index had gained 1.61 percent.
Asian markets had finished broadly lower ahead of the release of US jobs data, with Hong Kong diving 2.51 percent and Shanghai dropping 2.85 percent.
Tokyo ended 0.23 percent up but shares in electronics firm Pioneer slid 3.2 percent to 273 yen after it said it was set for a sixth straigh annual loss.
On currency markets, the euro fell to 1.4167 dollars late on Friday.
The big winners in Europe were shares in banks and energy companies as traders responded to signals that the worst of the recession could be over for Germany and Italy while oil prices rose on the back of the US jobs data.
French lender BNP Paribas gained 3.01 percent to 54.60 euros after unveiling a 6.6-percent quarterly profit gain this week, UBS rose 2.83 percent to 16.34 Swiss francs and Germany's Deutsche Bank won 3.34 percent to 47.01 euros.
Shares in Britain's state-rescued Royal Bank of Scotland however plunged 12.09 percent to 46.99 pence after it reported a five-fold jump in bad debts in the first half of this year, warning they would stay "high for a while."
A surge in first-half impairment charges to 7.5 billion pounds (8.8 billion euros, 12.6 billion dollars) led RBS to report a 26-percent jump in net losses during the six months to June 30 compared with a year earlier.
In the United States, meanwhile, government-rescued insurer AIG boosted stock sentiment, reporting profits for the first time in nearly two years.
Its shares soared 21.48 percent to 27.37 dollars in afternoon trading.
But Fannie Mae, the ailing giant mortgage finance lender bailed out by taxpayers, plummeted 12.53 percent to 69 cents after it reported another huge loss in the second quarter and asked for more US Treasury aid.
Auto giant Ford gained 2.37 percent to 8.26 dollars after the US Senate agreed to pump an extra two billion dollars into the "cash-for-clunkers" government incentives plan to stimulate auto sales that was about to expire.
The bond market weakened Friday, with the yield on the 10-year US Treasury bond jumping to 3.850 percent from 3.746 percent Thursday and that on the 30-year bond rising to 4.592 percent from 4.517 percent.
Bond yields and prices move in opposite directions.
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