Most European stock markets posted strong gains Friday on reassuring US jobs data, but Madrid was hit by news of falling profits at the country's crisis-hit banks.
London's FTSE 100 index of top companies gained 1.12 percent to close at 6,347.24 points as a slight expansion in manufacturing in January and positive quarterly results for telecoms firm BT cheered investors.
Frankfurt's DAX added 0.74 percent to 7,833.39 points and in Paris the CAC climbed 1.10 percent to 3,773.53 points, with data showing improvement in the eurozone manufacturing sector helping sentiment.
US non-farm payrolls figures showed that the US economy added 157,000 jobs last month, a shade less than the market forecast, with December's jobs gains revised 26 percent higher to 196,000.
The unemployment rate ticked up to 7.9 percent from 7.8 percent, however.
But markets were reassured by the figures.
"This adds to the evidence that the negative GDP figure in the fourth quarter is not a cause for excessive worry," said Berenberg bank economist Robert Wood.
Investors had been spooked by Wednesday figures showing the world's biggest economy shrank at an annual rate of 0.1 percent in the October-December quarter. Forecasts had been for a 1.0 percent rise.
Meanwhile the euro surged to $1.3711, its highest level since November 2011. It later fell back to $1.3694, still up sharply from $1.3579 late on Thursday in New York.
Gold prices edged up to $1,669 an ounce from $1,664.75 on the London Bullion Market.
"The PMI data for the eurozone also provided positive support, pointing to a direction of return of growth," said Anita Paluch, trader at Gekko Markets.
Data company Markit said its monthly Purchasing Managers Index (PMI) was 47.9 for January, indicating a slowing in the decline of manufacturing in the single currency area. Britain's figure was 50.8, showing expansion for a second month.
Madrid's IBEX shares index meanwhile slumped 1.59 percent to 8,229.7 points after CaixaBank, Spain's biggest bank by assets under management, said 2012 net profit plunged 7.82 percent to 230 million euros ($312 million) on provisions for possible real-estate losses.
Fellow lender BBVA said its net profit for 2012 had dropped 44.2 percent to 1.676 billion euros for the same reason.
In London, telecoms firm BT was the biggest gainer, putting on 6.52 percent to reach 264.8 pence after announcing a rise in underlying profits.
The firm said earnings before interest, tax, depreciation and amortisation (EBITDA) rose 2.0 percent to £1.55 billion ($2.46 billion, 1.79 billion euros) in the three months to December, compared with the same period of 2011.
Barclays share price fell 0.33 percent to 300 pence after chief executive Antony Jenkins announced that he would forego his 2012 bonus after a "very difficult year" at the lender, which has been plagued by the Libor rate-rigging scandal.
In Frankfurt, shares in Daimler rose 1.34 percent to 43.45 euros after German automaker unveiled plans to boost its position in the fast-growing Chinese market by acquiring a 12-percent stake in the country's fifth-biggest car group.
Shares in Credit Agricole rose 3.37 percent to 7.52 euros despite the French bank acknowledging that it will book a massive fourth-quarter charge.
Credit Agricole put the amount of the impairment charge at 2.68 billion euros, blaming tighter regulations and the financial climate.
Despite the bank heading for a historic loss for 2012, the announcement help removed uncertainty as French banks have been slower to adjust the value of their assets.
US stocks also powered higher on the jobs numbers, with the Dow Jones Industrial Average up 1.02 percent to 14,002.29 points in midday trading, breaking through 14,000 for the first time since 2007.
The broad-based S&P 500 added 0.93 percent to 1,512.05 points, while the tech-heavy Nasdaq Composite gained 0.81 percent to 3,167.63 points.
Asian markets were mixed on Friday, with Tokyo boosted by further weakness in the yen, while official data indicated Chinese manufacturing activity grew further in January but had moderated.
Shanghai stocks jumped 1.41 percent, Tokyo rose 0.47 percent, and Sydney climbed 0.87 percent, but Seoul eased 0.21 percent and Hong Kong was flat.