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 Europe's rebound contrasted with a tepid performance on Asian
markets, where stocks were in the red after data showed Japan's core
consumer prices had fallen for the first time since a massive
stimulus program launched by the central bank.
The European autos sector was the biggest sectoral gainer, though it
was still set for its worst weekly loss in over four years.
Volkswagen is reportedly due to bring in the head of its Porsche car
brand as new chief executive as it fights the fallout from the U.S.
vehicle emissions test scandal.
"Things got a bit out of hand in Europe, the way stocks got dumped
... People cannot refuse to start buying," said Markus Huber, trader
at Peregrine & Black.
"We are just so oversold in the short term."
The pan-European FTSEurofirst 300 was up 3.2 percent at 1,380.16
points at 0956 GMT. Blue-chip indexes in London, Paris and Frankfurt
were up between 2.6 and 3.6 pct
The past week has seen big trading swings on financial markets in
the wake of the U.S. Federal Reserve's decision to keep interest
rates unchanged, which appeared to break with the narrative of a
return to normality for the world's largest economy after eight
years of rock-bottom interest rates.
But Fed Chair Janet Yellen said on Thursday that she expects the
U.S. central bank to begin raising interest rates this year as long
as inflation remains stable and the U.S. economy is strong enough to
boost employment.
Her comments saw German Bund yields and the U.S. dollar rise. The
dollar index hit its highest level since August, while gold prices
dropped from their highest in a month.
The euro tumbled about 0.6 percent to $1.1164 from around $1.1230
before Yellen's speech, while the dollar was up around 0.2 percent
at 120.32 yen, from around 120.00 yen.
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"Despite what Yellen said, there is still no guarantee that the Fed
will hike rates this year. As such, the dollar is likely to lack
clear direction," said Masafumi Yamamoto, senior strategist at Monex
in Tokyo, who expects the pair to stick to a 118-122 yen range for a
while.
Some said it was a broadly positive signal for markets. "It would be
a good thing to see rates come off from low levels...If they stay
continuously low it's not a good sign of a healthy economy," said
Huber.
Oil markets rose on Friday as strong seasonal demand from China
outweighed weak consumer data from Japan, although analysts said
that the slowing global economic outlook meant that oil prices would
likely remain low for months to come.
U.S. crude was up 34 cents to $45.24 per barrel, while Brent crude
was up 12 cents to $48.30.
(Reporting by Lionel Laurent; Editing by Toby Chopra)
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