European shares were set to extend the previous session's gains on Friday, mirroring advances on Wall Street and in Asia, with signs of some strength in the U.S. economy improving sentiment and higher metals prices seen supporting miners.

Financial spreadbetters predicted the FTSE 100 <.FTSE> to open 27 to 34 points higher, or as much as 0.6 percent, Germany's DAX <.GDAXI> to gain 17 to 31 points, or as much as 0.5 percent, and France's CAC-40 <.FCHI> to open 6 to 11 points, or as much as 0.4 percent.

Prices of key base metals rose 1.4 to 2 percent on hopes that a recovery in the U.S. economy, the world's biggest, will improve demand for raw materials.

Data on Thursday showed weekly applications for unemployment insurance fell to a 3-1/2-year low, while a gauge of New York state manufacturing activity rose to its highest since May and another measure of factory activity in the mid-Atlantic region showed a surge in new orders.

European banks <.SX7P>, the worst performer this year with losses of 35 percent, will be in focus, as Fitch Ratings on Thursday downgraded some major banks including Barclays , Credit Suisse , BNP Paribas and Deutsche Bank citing increased challenges in the financial markets. Banks could rise tracking broader markets, but gains could be capped because of persistent concerns about the euro zone debt crisis.

Investors will keep an eye on Italy where the government faces a confidence vote in parliament, a move to speed up approval of a 33-billion euro ($43 billion) austerity package intended to restore market confidence in the euro zone's third largest economy.

The market is expected to remain choppy with major quadruple-witching expiries of individual stocks and index futures and options on Friday.

(Reporting by Atul Prakash)