Published: Thursday, 5 Nov 2009 | 3:37 PM ET

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European shares set a one-week closing high on Thursday after data showed new claims for U.S. jobless aid fell to a 10-month low and business productivity in the third quarter grew at the fastest pace in six years.

Investors risk appetite grew, with the VDAX-NEW volatility index down 4 percent. The lower the volatility index, based on sell and buy options on Frankfurt's top-30 stocks, the higher is investors' desire for risky assets such as equities.

Major European Indexes

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The FTSEurofirst 300 index of top European shares ended up 0.6 percent at 990.53 points, its highest close since Oct. 29, after hitting an intraday low of 969.74.

Retailers were among top gainers, led by Delhaize which gained 5 percent after the Belgian group raised its 2009 operating profit forecast and reassured about its ability to cope with tough trading conditions in its main U.S. market.

Ahold jumped 4.5 percent. The grocer is freeing up two of its most senior executives from day-to-day management operations, fueling speculation it was stepping up the search for acquisitions.

Carrefour, Tesco and J Sainsbury rose 0.7-3.5 percent.

"Everybody was cautious in the last few days, but the macro-economic data gave the market a little push," said Giuseppe-Guido Amato, strategist at Lang & Schwarz. "We see a good support here."

U.S. data showed productivity surged at a 9.5 percent annual rate, the quickest pace since the third quarter of 2003, while initial claims for state unemployment benefits dropped 20,000 to 512,000 last week, the lowest since January.

Energy shares gained ground as crude oil traded around $80 a barrel, up more than 4 percent from a week ago. BP, Royal Dutch Shell, BG Group, Tullow Oil, Repsol and Total added 0.3-0.9 percent.

Across Europe, Britain's FTSE 100 index, Germany's Dax and France's CAC 40 rose 0.4-1.1 percent.

The market also got support after the European Central Bank and Bank of England kept interest rates on hold: The BoE said it would expand its quantitative easing program by 25 billion pounds ($41 billion), while the ECB kept interest rates at 1 percent as expected.

We had the Bank of England giving the biggest lift in the sense that it said it will give a small expansion of the QE scheme and that I think is a positive," said Peter Dixon, economist at Commerzbank.

"We will probably really get a directional sense when the (U.S.) payroll numbers come in tomorrow," he said.

Financials also advanced, with Standard Chartered, Societe Generale, Natixis and Banco Santander rising 0.7-3.2 percent.

French bank BNP Paribas rose 3.3 percent after it beat forecasts with a strong rise in quarterly profits, enhancing its status as one of the winners from the banking crisis just as German peer Commerzbank slipped further into the red.

Commerzbank, which received an 18.2 billion euros bailout, said it still expected to make a loss in 2009 and 2010. Its shares fell 4.7 percent.

Among miners, Vedanta Resources fell 2.1 percent after posting a steep fall in first-half profit due to weaker metals prices. BHP Billiton, Xstrata and ENRC fell 0.2-0.6 percent.

Bureau Veritas fell 9.9 percent after disappointing results, but Adecco, the world's largest staffing company, rose 2 percent after it said there were signs of a tentative pickup in demand for temporary workers and companies were making fewer layoffs.

The European index, which slumped 45 percent last year, is up 19 percent in 2009 and has surged 53 percent since hitting a record low in early March.

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