European shares jump on coat-tails of Wall Street

LONDON, Dec 7, 2007 (AFP) - Europe's main equity markets advanced Friday after another overnight rally on Wall Street, but some investors remained cautious before the release of all-important US jobs data, dealers said.

"Of course, the focus is going to be on the non-farm payrolls data," said CMC Markets analyst Matt Buckland, in reference to the publication later Friday of the US employment report for November.

"But we saw a solid rally on Wall Street overnight and that's giving us the gains we're seeing this morning."

In morning trade, London's FTSE 100 index of leading companies added 0.95 percent to 6,547.50 points. In Paris the CAC 40 won 0.85 percent to 5,722.02 and Frankfurt's DAX 30 gained 0.59 percent to 7,987.55 points.

The DJ Euro Stoxx 50 index of top eurozone shares increased by 0.76 percent to 4,448.26 points.

The European single currency stood at 1.4634 dollars.

US stock markets rallied Thursday as US President George W. Bush announced a major mortgage rescue plan aimed at helping to stave off a wave of mounting home foreclosures.

Japanese share prices closed higher on Friday at a one-month high as investors took heart from the White House plan, which was aimed at helping 1.2 million distressed US homeowners faced with a worsening housing slump.

The London market also rallied, with housebuilders topping the risers leaderboard on hopes of further British interest rate cuts.

Taylor Wimpey jumped 7.50 percent to 214.25 pence, Persimmon leapt 5.73 percent to 793.5 pence and Barratt Developments won 2.62 percent to 460 pence.

The Bank of England trimmed its key rate by a quarter of a percentage point to 5.50 percent on Thursday, the first reduction for more than two years.

Rate cuts are a boost for companies because they reduce loan repayments and the cost of doing business and they increase the amount of consumers' disposable income.

For the homebuilding sector, lower interest rates have a positive effect as they tend to encourage demand for housing as commercial banks lower the interest rates they offer on home loans.

In Frankfurt, Munich Re shares jumped 4.32 percent to 130.55 euros on a report that a Swedish private equity firm has bought a 3.0-percent stake in the German reinsurance giant.

In US deals on Thursday, the Dow Jones Industrial Average surged 1.30 percent to a close of 13,619.89 points, marking a second straight day of hefty gains.

The Nasdaq composite finished up a strong 1.60 percent at 2,709.03, while the Standard and Poor's 500 broad-market index gained 1.50 percent to stand at 1,507.34 points.

In Asia on Friday, the Tokyo Stock Exchange's benchmark Nikkei-225 index gained 0.52 percent to 15,956.37 points, which was the best finish since November 7.