PARIS, Oct 11 (Reuters) - European stocks rallied onThursday as a drop in U.S. jobless claims fuelled recovery hopesfor the world's biggest economy while Spain's credit downgradeboosted expectations that Madrid would soon request a bailout.
The FTSEurofirst 300 index of top European sharesunofficially closed 0.9 percent higher at 1,099.37 points,snapping a three-day losing streak during which the index hadlost 1.9 percent.
"We're buying the dips, adding beta in portfolios. Theoverall newsflow isn't too bad, and we've got profit warningsalready so expectations for the upcoming earnings season are notvery high," Talence Gestion fund manager Alexandre Le Drogoffsaid.
"Even as economic growth remains sluggish, we have thefeeling that the safety nets put in place by the ECB will work,and it's a big relief. It basically brings back visibility."
Data showed initial jobless claims fell to the lowest levelin more than four and a half years, signalling improvement inthe battered U.S. labour market.
Luxury stocks paced the gains on Thursday as Burberry's
reassuring comments on sales trends - a month after itsshocking profit warning - helped the sector reverse a portion ofits month-long slide, with traders also mentioning shortcovering.
Burberry surged 13.6 percent, Louis Vuitton owner LVMH
added 4.1 percent and Swiss watch maker Richemont
gained 4.5 percent.
(Reporting by Blaise Robinson; editing by Christian Plumb)
Keywords: MARKETS EUROPE STOCKS/CLOSE