PARIS, June 7 (Reuters) - European shares ended sharply higher on Friday, reversing early losses after U.S. jobs data showed the economy was growing modestly but not enough to prompt the Federal Reserve to wind down its stimulus measures.
The FTSEurofirst 300 index of top European shares provisionally closed 1.4 percent higher at 1,194.94 points, erasing a portion of the week’s losses.
Data showed the U.S. economy added 175,000 jobs in May, just above the median forecast in a Reuters poll, while the unemployment rate ticked higher to 7.6 percent. The Fed has explicitly linked the health of the jobs market to the continuation of its ultra-loose monetary policy, which has been a major driver for stocks.
“A lot of people have been in ‘risk off’ mood this week, and we could see them coming back in the next days. Just look at the volatility index,” said David Thebault, head of quantitative sales trading, at Global Equities.
The Euro STOXX 50 Volatility index, known as Europe’s ‘fear gauge’, sank 10.1 percent, signalling a drop in investors’ risk aversion following the data.
The rally was broad-based, with financial shares among the top blue-chip gainers. Deutsche Bank added 3.8 percent, Credit Agricole rose 3 percent and UBS gained 3.4 percent.