LONDON: European stocks gained and the euro strengthened on positive jobs data from the US and growing signs that a coordinated rescue for eurozone banks is in the works.
A day after the European Central Bank and the Bank of England took fresh steps to boost credit, higher-than-expected US jobs data helped ease concerns that the world's biggest economy was at risk of slipping back into recession.
On the negative side, Moody's downgraded its credit ratings for a dozen British banks, including state-rescued Royal Bank of Scotland and Lloyds TSB, highlighting worries over the banking sector and the need for European governments to help.
In afternoon deals, London's benchmark FTSE 100 index edged up 0.09 percent to 5,295.84 points, Frankfurt's DAX 30 gained 0.15 percent to 5,653.74 points and in Paris the CAC 40 rose 0.51 percent to 3,091.12.
The euro edged up to $1.347 from $1.3433 in New York late Thursday after briefly rising briefly above $1.35 for the first time this week. The dollar dipped to 76.80 yen from 76.69 yen.
US stocks were mostly higher in opening trade Friday, lifted by the report showing the US economy created more jobs than expected in September.
The Dow Jones Industrial Average added 0.40 percent in the first minute of trade, building on three straight sessions of gains. The broader S&P 500 climbed 0.18 percent while the tech-heavy Nasdaq Composite fell 0.08 percent.
"The winning streak for the US stock markets continues ... on the heels of a stronger-than-expected September nonfarm payroll report, which also came with upward revisions to the figures posted in August," Charles Schwab analysts said in a note.
The US economy created a net 103,000 jobs in September, well above forecasts for 60,000 jobs, but still not enough to lower the unemployment rate, which has been stuck at 9.1 percent for three months.
Moody's downgraded British banks due to the removal and curtailment of government financial support. Affected banks slumped, with Royal Bank of Scotland down 4.8 percent.
Moody's added that it believed Britain's government was now more likely to allow smaller banks to fail if necessary.
Dexia, the teetering Franco-Belgian bank set to be split up and part-nationalised, was downgraded one-notch by Standard & Poor's a day after its shares were suspended from trading.
The downgrades come as the European Union seeks swift recapitalisation of the region's banks to avert debt crisis contagion.
"The markets have been preoccupied with Europe in the last few days but as we end the week the US economy comes back into focus," said Kathleen Brooks, an analyst at trading group Forex.com.
She added: "The market is also reacting well to news that global central banks are willing to do their bit for growth and liquidity (...) Even a credit rating downgrade of 12 UK financial institutions by Moody's didn't dampen sentiment."
Asian stock markets closed higher on Friday.
"With moves to inject capital into European banks, there are signs of a brighter outlook for progress, although a full resolution is still far off," said Hiroichi Nishi, general manager at SMBC Nikko Securities in Tokyo.
The Bank of Japan voted unanimously to keep its key rate unchanged between zero and 0.1 percent as it continued earlier measures to help safeguard Japan's fragile recovery.
Copyright AFP (Agence France-Presse), 2011
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