A rebound in risk-sensitive banks and commodity stocks hoisted the top share index sharply higher on Friday as investors jostled for position ahead of crucial monthly U.S. jobs data and a key summit next week to confront the euro zone debt crisis.

The FTSE 100 <.FTSE> was up 91.65 points, or 1.7 percent, at 5,580.99 by 12:29 p.m., bouncing back after Thursday's 0.3 percent slip in the wake of Wednesday's 3.2 percent jump.

We are higher on a little bit of optimism ahead of non-farm payrolls and obviously the European situation appears to have stabilised for the time being, Michael Hewson, analyst at CMC Markets, said.

(Policymakers) are sort of getting their act together, so to speak. But my concern is, will we be able to have any more clarity than we have already got (after the EU summit).

U.S. non-farm payrolls, due at 1:30 p.m., were forecast to rise 122,000 in November, after an 80,000 rise October, with the unemployment rate seen unchanged at 9.0 percent.

Meanwhile, France's president, Nicolas Sarkozy, called for a new treaty incorporating tougher budget discipline, a European Monetary Fund to support countries in difficulty, and decisions in the euro area taken by majority vote instead of unanimity.

Sarkozy said he and German Chancellor Angela Merkel would meet on Monday to outline joint proposals to put to a December 9 EU summit, seen as make-or-break for the 12-year-old single currency.

U.S. stock index futures rose more than 1 percent, with investors hopeful about the jobs number following recent strong data out of the United States.

Data on Thursday showed U.S. manufacturing activity at its highest level in five months, and recent data on consumer spending and private-sector job creation have also boosted optimism.

The FTSE 100 <.FTSE> was on course for its biggest weekly percentage gain since early 2009, with confidence boosted by Wednesday's co-ordinated move by central banks to inject liquidity to ease banks' funding constraints.

Banks were among the best performing sectors, led by a 7.3-percent advance from Barclays , while Lloyds Banking Group firmed 5.8 percent.

ICAP was another good gainer, up 6.6 percent, rallying after falls in the previous session as BoA Merrill Lynch added the interdealer broker to its Europe 1 focus list, citing the stock's compelling valuation.

Miners also bounded higher, with BHP Billiton , up 4.6 percent, among the best off, as copper prices firmed on hopes U.S. jobs data could beat expectations.

Integrated oils got a boost too as crude prices rallied 0.8 percent, with BP up 1.7 percent.

BP has agreed to sell its Canadian natural gas liquids business to Plains All American Pipeline
for $1.67 billion as part of an effort to raise $45 billion to pay for its Gulf of Mexico oil spill in 2010.

Some market participants sounded a note of caution against picking up stocks.

I think we are in the middle of a big short squeeze. The fundamentals are actually deteriorating quite quickly everywhere outside the United States, said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets.

I would be very careful letting higher stock prices suck you into the market.

Car insurer Admiral dropped 3.5 percent, the biggest blue-chip faller as Investec Securities cut its price target for the stock following recent profit warnings.

Rolls-Royce shed 0.8 percent as UBS downgraded its rating to sell from neutral and trimmed its target price to 600 pence from 610 pence while raising its EPS estimates by 19 percent, saying the stock was still expensive.

(Additional reporting by Jon Hopkins; Editing by Dan Lalor)