* FTSEurofirst 300 up 0.4 pct
* Index off 5-1/2-yr high after weak U.S. data
* Swatch update cheers luxury sector
By Toni Vorobyova
LONDON, Jan 10 (Reuters) - European equities climbed to a new 5-1/2-year high on Friday boosted by a string of strong corporate updates, with the rally only slightly dented by much weaker than expected U.S. jobs data.
The world’s biggest economy added only 74,000 non-farm jobs in December - a third less than even the most conservative analyst forecast.
But markets were consoled by the temporary negative impact from cold weather, as well as by the fact that any signs of economic weakness would likely reduce the pace at which the U.S. Federal Reserve scales back its equity-friendly stimulus.
“In the U.S., the bad news is still good news for equities because it does at first glance - which is how I think the markets have taken it - suggest that tapering is less likely,” said James Butterfill, strategist at Coutts.
“But also ... a lot of other macro data is quite positive and it supports the idea that this is a temporary blip caused by the weather rather than something more ominous in the U.S. economy.”
The FTSEurofirst 300 was up 0.4 percent at 1,210.03 points by 1512 GMT - knocked off a 5-1/2-year peak of 1,328.31 by the U.S. data but still firmly in positive territory.
Deutsche Lufthansa led the gainers, up 8.0 percent in more than three times average daily volumes after reporting a rise in December passenger traffic and forecasting a shrinking 2014 fuel bill.
Swatch offered more good news to investors scrutinising trading updates for clues on the likely strength of the European fourth-quarter earnings season, which kicks off in coming weeks.
Shares in the world’s largest watchmaker added 3.8 percent after it reported rising sales and forecast double-digit 2014 growth, easing concerns of a downturn in export destination China.
The news cheered the rest of the luxury sector, with Richemont, the maker of Cartier jewellery and IWC watches, up 3.9 percent and British luxury brand Burberry up 3.1 percent. Italy’s Luxottica, the world’s top premium eye wear maker by sales, gained 2.2 percent.
“Luxury goods will be in demand this year as an improving economic outlook in developed markets is also good for emerging markets,” said Didier Duret, chief investment officer at ABN-AMRO Private Banking.
Underscoring continued investors appetite for Europe and its companies, Lipper data showed U.S. funds putting money into the region’s equities for a 28th week in a row.
“We are seeing the financial sector normalise, we are seeing a return of business confidence and a return of consumer confidence. And that - in conjunction with a relatively more accommodative stance by (ECB chief) Mario Draghi relative to other central banks like U.S. and UK - suggests that European equity markets should continue to outperform,” said Butterfill at Coutts.