U.S. jobs optimism helps European shares extend rally

Reuters - UK Focus

* FTSEurofirst 300 up 0.3 pct

* Market whispers of good U.S. non-farm payrolls

* ArcelorMittal (Other OTC: ARCXF - news) top gainer after raises profit forecast

* Skanska (Other OTC: SKBSY - news) drags after orders lag

By Alistair Smout

LONDON, Feb 7 (Reuters) - European shares rose for a secondstraight day on Friday, supported by hopes that jobs data laterin the session would reveal a brightening picture for the U.S.economy.

Investors were hopeful that U.S. employment figures wouldshow signs of improving economic growth, after Thursday'sencouraging initial jobless claims data fuelled strong gains onWall Street.

While Thursday's data has no direct bearing on January'semployment report, as it falls outside the survey period, itboosted the outlook for the world's largest economy.

"The initial jobs report has increased optimism and I thinkthe non-farm payrolls number will be bullish later," Mark Ward,head of execution trading at Sanlam Securities, said.

"However, if it is a bad number, I think we will see apretty harsh sell-off."

Non-farm payrolls are expected to have increased by 185,000last month, according to a Reuters survey of economists. Thiswould offer assurance that economic growth was not faltering.

Chatter in the market was of an even higher number, however,with Goldman Sachs (NYSE: GS-PB - news) predicting 200,000 and Societe Generale (Paris: FR0000130809 - news) looking for 270,000.

The pan-European FTSEurofirst 300 was up 0.3percent at 1,293.85 at 1111 GMT, building on the previoussession's 1.5 percent rally, which was the biggest daily gainsince mid December.

Leading gainers were basic material stocks such asindustrials and miners, which are sensitive to optimism over theglobal economy.

Heavyweight steelmaker ArcelorMittal (Other OTC: AMSYF - news) - regarded asa gauge for the health of global manufacturing - was the topFTSEurofirst 300 gainer, up 4 percent after forecasting higherprofits for 2014.

German blue-chip steelmaker ThyssenKrupp (Xetra: TKA.DE - news) alsogained, up 1.1 percent, and basic resources stocks rose1.2 percent, the top sectoral gainer in Europe.

But peer SSAB (Other OTC: SSAAF - news) fell 0.8 percent after reportingits sixth straight quarterly loss, with growth slowing inChina.

"For Arcelor, the numbers were a bit a better for Q4, andthe outlook isn't horrific, so the stock's having a nice pop.But equally, for SSAB, losses continue, and they're talkingabout slower demand from Asia," Nick Xanders, who heads upEuropean equity strategy at BTIG, said.

"The move in ArcelorMittal looks a bit excessive, but peopleare relieved as it could have been a lot worse."

Danske Bank (Other OTC: DNSKF - news) was also among the top risers,building on a 3.7 percent gain after it released results onThursday. The Danish bank rose 3.9 percent on Friday afterNomura and Deutsche Bank (Xetra: DBK.DE - news) both raised their target prices inlight of the report.

The top faller was Skanska, down 3.8 percent,after the Nordic (SES: MR7.SI - news) region's biggest builder said that the outlookfor its markets was slowly improving after it postedfourth-quarter order intake below expectations.

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