European shares rose to a five-week closing high on Friday, after better-than-expected U.S. nonfarm payroll data eased worries that the world's largest economy was slowing down and boosted optimism about global growth.

Cyclical stocks such as carmakers and miners were among the strongest gainers on hopes that better economic growth would boost demand for these sectors.

The STOXX Europe 600 Automobiles & Parts index gained 1.7 percent and the STOXX Europe 600 Basic Resources index rose 1.1 percent.

Standout risers were miners Vedanta Resources and Xstrata, up 4.2 percent and 2.7 percent respectively in strong volumes.

The worries about nonfarm payrolls were overdone, said Jane Coffey, head of equities at Royal London Asset Management. Sectors like miners have been sold off due to recession fears, but the data is showing that is not really the case.

Vedanta had lost 34.5 percent since late July and Xstrata 29.5 percent as investors sold out of these companies due to concerns about the growth outlook.

Coffey added that her portfolio was positioned in companies that will benefit from global growth and had recently been buying back into Xstrata after reducing its position in June.

The pan-European FTSEurofirst 300 index of top shares closed up 0.7 percent at 947.63 points -- its highest close since Sept. 2 -- and ended the week 2.6 percent higher.

The benchmark ended above a key resistance level, formed by its 50-day moving average at 937.24 points, with the next resistance seen at the 38.2 percent Fibonacci Retracement of its sell-off from February to September, or 980.52 points.


However, the index is still in bear market territory having fallen 20.5 percent since its 2011 February high, on concerns about growth and fears of contagion in the euro zone sovereign debt crisis.

After the European market close, ratings agency Fitch downgraded Spain's sovereign debt rating by two notches and cut Italy by one notch to reflect the worsening of the euro zone crisis.

Divisions persist among policymakers over how the euro zone's rescue fund should be used to counter the crisis.

A German source said France wanted to tap the rescue fund for its banks, while Berlin has insisted it should only be used as a last resort.

Greece was still in talks with the European Union and International Monetary Fund over receiving its next aid tranche and could run out of cash as soon as mid-November (Stuttgart: A0Z24E - news) .

Some market participants did not see the day's gains as the start of longer-term upwards trend.

Although markets rallied strongly for much of the week, it was based on measures designed only to deal with the symptoms, said Lothar Mentel, chief investment officer at Octopus Investments, which manages nearly $4 billion.

Even if the politicians can pull a magic rabbit out of the hat, investors will need to get used to the aftermath, which will likely be at best a lengthy period of low growth, or at worst, a formidable recession.