Euro Shares Snap Two-Day Losing Streak

European shares snapped a two-day losing streak, following Wall Street's lead, with both cyclical commodity stocks and defensive drug makers rising sharply.

The FTSEurofirst 300 index of top European shares closed up 1.8 percent at 914.63 points, its first daily gain in three sessions, having fallen to as low as 890.81 points in volatile trade.

European stocks recovered from earlier lows as investors shrugged aside weak U.S. jobs data which showed U.S. employers cut payrolls by 240,000 in October, much more severely than expected, while September registered the biggest monthly loss in jobs in nearly seven years.

"While the jobless figures out on Friday have been bad, a lot of it has been priced in the market. Traders are keen to get back in again, words such as cheap valuations are beginning to fly around again," said Tom Hougaard, strategist at City Index.

"There is a growing sentiment that we have seen the lows for some time and now people want to get in," Hougaard said.

Darren Winder, strategist at Cazenove, also said the jobs data had only confirmed what was already feared. "Weak numbers are also likely to put pressure on the Fed to continue easing," he said.

Energy stocks contributed the biggest gains on the European index as crude prices ticked higher following the bleak jobs report. BG Group, BP, Royal Dutch Shell and Total gained about 3 to 5 percent.

Winder said investors were beginning to put money into the oil sector as the stocks offered more attractive dividend yields than other sectors.

Metals gained as copper rose. BHP Billiton, Rio Tinto and Vedanta Resources rose more than 4.5 percent.

Pharmaceuticals also continued to rise following gains on Thursday. Novartis, Roche and GlaxoSmithKline gained 3 percent or more.

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Insurers advanced after Munich Re, up 6.6 percent, delivered results that weren't as bad as they first appeared. Munich Re slashed its 2008 profit forecast for a second time but said it was confident about its medium-term goal.

AXA, Allianz and Swiss Reinsurance gained 2 to 6 percent.

Banks stocks were mixed. UBS and Bank of Ireland fell more than 4 percent, while Barclays, Societe Generale and Lloyds TSB advanced.

Across Europe, the FT-SE 100-share index rose 2.2 percent, Germany's Xetra DAX index gained 2.6 percent and France's CAC-40 index advanced 2.4 percent.

Real estate was one of few sectors in the red after Morgan Stanley said it expected a further 42 percent fall in the share prices of major UK property companies.

The brokerage said there would be virtually no new debt advanced on UK commercial property over the next 12 to 18 months because banks were short of capital and felt overexposed to the asset class.

Land Securities and British Land lost more than 1.5 percent.

German electronic conglomerate Siemens shed 1.2 percent. The group is expected to report an 82 percent decrease in fourth-quarter pretax profit to 273 million euros, according to Reuters estimates.

Lafarge, the world's biggest cement maker, fell 2.9 percent after it abandoned its 2010 goals, citing uncertainty triggered by the global economic turmoil.

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