European share prices rose on Friday following a three-day drop, as bargain hunters scooped up cyclical mining and auto shares after a deal by euro zone finance ministers to boost the currency bloc's firewall reassured investors.

Index heavyweight Total bucked the trend, falling 0.2 percent and extending the week's drop to nearly 8 percent as the oil major struggles to close the gas leak on its UK North Sea Elgin field.

At 1050 GMT the FTSEurofirst 300 index of top European shares was up 0.9 percent at 1,068.80 points, after losing 2.7 percent in three days and hitting a three-week low.

Mining and steel stocks led the risers, with Anglo American up 3 percent and ArcelorMittal up 3.2 percent.

Auto stocks - the best performing sector so far this year with a gain of nearly 30 percent - also featured among the biggest gainers on Friday, with Daimler adding 2.9 percent and BMW 3.2 percent.

Investors' risk appetite, measured by the Euro STOXX 50 volatility index known as the VSTOXX, sharply recovered, with the VSTOXX falling 9.6 percent, to 22.90, its steepest one-day drop in three weeks.

For Valerie Gastaldy, head of Paris-based technical analysis firm Day By Day, the fact that implied volatility remains relatively low despite the two-week pullback shows that investors are increasingly complacent.

The bullish crowd is coming back to the market at these prices. There is now a widespread belief that the market is bullish and will rise to new highs, she said.

We're very conservative, and take on very little risk. We'll use short stop-losses and we won't let positions run for long.

Investors' focus was back on euro zone politics on Friday, with euro zone finance ministers agreeing on a temporary increase in their financial rescue capacity to prevent a new flare-up of the region's sovereign debt crisis.

The euro zone's blue chip Euro STOXX 50 index was up 0.9 percent at 2,475.90 points on Friday, with the next resistance level at 2,483, representing the 23.6 percent Fibonacci retracement of the recent three-month rally halted earlier this month.

But despite Friday's recovery, chartists remained cautious on the outlook for European stocks for the next few weeks.

All the European markets have broken below their 2012 trend channels and, except for the DAX, all the 50-day moving averages have been pierced on the downside. Now, indices are getting close to March lows, Aurel BGC chartist Gerard Sagnier said.

It's not impossible to see a very short-term technical bounce, but we'll have to wait for the consolidation phase, which has just started, to stabilise before going 'long' again.

Investors were also waiting for Spain's new budget cuts on Friday as the government struggles to regain credibility in its efforts to meet deficit targets.

Spain has been in the spotlight this year, with its stock market strongly underperforming euro zone peers and its 10-year bond yields on Thursday closing at their highest levels since early January.

Around Europe, UK's FTSE 100 index was up 0.6 percent, Germany's DAX index up 1 percent, and France's CAC 40 up 1.3 percent.

Even after the two-week pullback, the FTSEurofirst 300 was set to post its biggest first-quarter gain since 2006, up 6.8 percent, with the red-hot DAX enjoying its strongest first-quarter performance since 1998, up 17.8 percent.

The blue chip Euro STOXX 50 is up 6.9 percent so far this year, and is forecast to add another 10 percent by the end of December to close the year at 2,705 points as ultra-loose monetary policy continued to revive investors' demand for equities, a Reuters poll of analysts found.