LONDON Nov 9 (Reuters) - European shares closed modestly higher on Friday after a batch of strong U.S. data injected some optimism about a recovery in the world's largest economy and fuelled a technical rebound in late trade.
A sharp increase in September U.S. wholesale inventories and sales, coupled with a rise in consumer sentiment this month, helped act as a counterweight to persistent concerns around the outlook for U.S. fiscal policy.
The euro zone blue-chip Euro STOXX 50 index provisionally closed up 0.3 percent at 2,486.39 points, extending gains after breaking above a late October low in 2,467 area.
Concerns about a "fiscal cliff" of automatic tax hikes and spending cuts worth $600 billion and due to kick in on Jan. 1 had pushed the index 2.7 percent lower in the previous two sessions.
"We think that an agreement will be reached and the fiscal cliff is going to be sized down," Matthias Thiel, a strategist at M.M.Warburg & Co in Hamburg said.
"There is a chance the negotiations are going to frighten the stock market in the short term but in general we think that a solution should be reached and that's why investors should buy on those dips."