Strong dollar powers Europe gains

Another positive day but traders keep eye on U.S. jobless numbers for any signs of recovery in the biggest economy.

LONDON, England -- European markets soared in midday Friday trading, as the dollar rose against the euro.

"The dollar has strengthened notably versus the euro in the past week, which will undoubtedly help provide a well-needed boost to European profits,'' Martin Brooker, a pan-European strategist at E+Trade Securities, told Reuters.

London's FTSE 100 rose 89 points, or 2 percent, to 4,560.4 and Frankfurt's electronically traded Xetra Dax jumped 126.92 points, or 3 percent, to 4,385.19, while the CAC 40 blue chip index in Paris climbed 117.74 points, or 3.2 percent, to 3,814.18

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 2.6 percent, with the information technology, insurance, media and telecom sub-sectors leading gains.

The greenback rose to a 10-day high against the euro, around 2.5 percent above last week's two-year low close to parity with the single currency. Some 20 percent of direct sales of companies in the FTSE Eurotop are exposed to the U.S. currency, Reuters said.

Research from investment bank HSBC showed recently that Eurotop 300 companies with U.S. sales exposure of 70 percent or more.

Repsol YPF rose 7.9 percent to 12.28 euros after the Spanish oil gaint's executive told a Madrid radio station the company expects to reduce debt sooner than expected because of a stronger euro and recent asset sales.

But trading was quiet ahead of Wall Street's half day session. Investors are braced for the release of key U.S. labour data, which should indicate if the companies in the world's biggest economy are confident of a recovery.

And many market watchers are not sure whether stocks have further to fall or are close to establishing a bottom.

"Equities have fallen a long way in a short period of time so we're naturally seeing a technical bounceback but, having said that, investor confidence is still shot out," Michael Joynson, business director in European Equities at Invesco Asset Management, told Reuters.

"Fund flows in May were still just about positive but most of the money's going into cash at the moment and will remain there until confidence is restored. That will take some time.''

London's FTSE 100 has fallen to 5-year lows earlier this month, while other key indices in Europe are hovering around near-nine month lows amid concerns about accounting standards and faltering recovery.

German engineering company Babcock Borsig has filed for insolvency, another reminder of the still-difficult business conditions.

Telecom equipment makers made strong gains. Finland's Nokia, the world's biggest mobile phone maker, rose 6.5 percent to 15.45 euros and Swedish rival Ericsson added 7.9 percent. Ericsson was helped by an upgraded from investment bank Schroder Salomon Smith Barney to 'neutral'.

France Telecom (PFTE) soared 13.6 percent to 14.83 euros on hopes the French government, which owns 55.5 percent of Europe's second-largest telecom operator, would step in help the group with its huge debt.

Deutsche Telekom (FDTE), Europe's biggest phone operator, rose 7.7 percent to 10.34 euros, while the region's biggest mobile phone operator Vodafone (VOD) added 5.6 percent to 90.25 pence.

Vivendi Universal (PEX) rose 8.3 percent to 15.90 euros, extending the previous session's gains, after a team of French business veterans took charge and vowed to solve its cash crisis. The company named revamp expert Jean-Rene Fourtou to take over as chairman and CEO from empire builder Jean-Marie Messier

Europe's second-largest chip maker Infineon Technologies (FIFX) climbed 8.7 percent to 16.11 euros after a solid performance by its rivals in Asia.

AstraZeneca (AZN), Europe's second-biggest drugmaker, rose 4.4 percent to 2,562.8 pence. The company said Japan had become the first country to give market approval to its lung cancer drug Iressa. (Full story)

The AEX index in Amsterdam rose 3.1 percent and Milan's MIB30 index gained 3 percent, while the SMI in Zurich added 2.3 percent.

Wall Street was closed on Thursday for the Fourth of July holiday but on Wednesday, stock markets eked out gains, after two days of punishing losses, but concerns remained about possible terrorism, with investors covering bets late in the day that stocks would fall further.

The Dow Jones industrial average jumped 47.22 points to 9,054.97, up about 0.5 percent and snapping a three-session losing streak. The Nasdaq composite index closed up 22.35 to 1,380.17, up about 1.7 percent. The Standard and Poor's 500 index rose 5.90 to 953.99.