Euro Shares Close Higher on US Data, Oil

European shares gained on Friday, withstanding a heavy drag from falling mining stocks, while better-than-expected U.S. manufacturing data helped ease recessionary fears and oil continued its downward slide.

The FTSEurofirst 300 index of top European shares closed 0.4 percent higher at 1,190.25 points, but lost 0.7 percent over the week.

Stocks were catapulted into positive territory by the release of U.S. manufacturing data. The New York Federal Reserve's "Empire State" general business conditions index -- one of the earliest gauges of U.S. factory activity -- staged a surprise increase.

"Some of the data we have seen has been very encouraging. The New York Fed data was quite surprising," said Stephen Pope, chief global market strategist at Cantor Fitzgerald in London.

A strengthening of the dollar against the euro lifted aerospace and defence groups EADS and Zodiac more than 6 percent, while Rheinmetall added 1.8 percent.

Other notable gainers included Vestas, which rose 7.3 percent after the world's No.1 wind turbine maker released second-quarter earnings and said its order backlog ballooned as demand for renewable energy sources rose following soaring oil prices. Spanish rival Gamesa advanced 2.9 percent.

Sanofi-Aventis ended 3 percent higher after Warren Buffet's Berkshire Hathaway raised its stake in the French drugmaker.

Around Europe, Britain's FTSE was down 0.8 percent, reflecting its heavy weighting in mining stocks, while Germany's DAX rose 0.1 percent and France's CAC added 0.7 percent.

Miners, Oils Weigh

Mining shares ranked among the worst performing stocks in Europe as base and previous metals eased. Xstrata, Anglo American, Rio Tinto and BHP Billiton all shed between 3.4 and 5.6 percent.

Heavyweight oil stocks also suffered from the weaker oil price, which fell 2.5 percent to around $112 a barrel. BP, Shell and Total lost between 0.7 and 2.2 percent.

Automotive stocks were under pressure after Goldman Sachs downgraded the sector to "underweight" in its portfolio strategy. Goldman said it was unlikely the sector would outperform the market until a more optimistic outlook emerges for the global economy.

BMW fell 2.4 percent, Peugeot lost 1.1 percent and Renault dropped 2.1 percent.

Car parts maker Continental is set to drop opposition to hostile bidder Schaeffler and accept the ball bearings maker as its controlling shareholder in an agreement that could come early next week, according to sources with knowledge of the matter. Continental rose 1.1 percent.

Among prominent losers, Merck KGaA shed 3.1 percent after its customer Chi Mei Optoelectronics, Taiwan's No. 2 LCD maker, said it still plans to reduce output and had suspended a plan to build an LCD module factory in Vietnam.

Swiss Life extended Thursday's loss to drop 4.7 percent, as UBS downgraded the stock on the back of the company's decision to buy a stake in German financial services group MLP.