European stocks rallied to a high close on Friday as Wall Street surged in response to key earnings reports from leading US companies which lessened fears about the economic slowdown, traders said.

London's FTSE 100 index of leading shares gained 1.27 percent to end at 6056.50 points and Frankfurt's Dax 30 surged by 2.41 percent in value to 6843.08 points.

In Paris the Cac 40 jumped by 2.05 percent to finish at 4961.69.

The European single currency stood at 1.5730 dollars, falling on profit-taking after striking a record peak at 1.5984 on Thursday.

US shares roared higher on Friday in morning trade as investors cheered earnings reports from Citigroup, Google and other big companies indicating that ongoing financial turmoil may be winding down.

"Several big companies have placated the market's worst fears with respect to earnings," said Patrick O'Hare, an analyst at Briefing.com.

The blue-chip Dow Jones Industrial Average surged 1.50 percent to 12 810.04 points within five minutes after the market opening and managed to hold onto the gains heading into afternoon trade.

Google set the buoyant tone

Internet search giant Google set the buoyant tone, reporting after Thursday's market close that profits surged more than 30 percent to $1.31-billion in the first three months of the year.

Citigroup picked up the pace Friday. The giant bank reported before the market open a first-quarter net loss of $5.1-billion, hurt by at least $12-billion in write-downs amid soured subprime investments.

Citigroup, a component of the Dow industrials, also said it would cut about 9000 jobs from its 370 000 workforce, in addition to the 4200 cuts announced in the previous quarter.

Investors cheered the Citigroup news "on the notion that the worst of the bank's problems are behind it," O'Hare said.

The European financial sector leapt higher on the news.

In Paris, French banks BNP Paribas and Societe Generale surged in value, while Commerzbank and Deutsche Bank also enjoyed bumper gains in Frankfurt.

In London, shares in British bank Royal Bank of Scotland jumped higher amid reports of a forthcoming massive rights issue.

British media reported Friday that RBS was set to ask shareholders for a multi-billion-pound cash boost after being hit by subprime-linked losses and costs related to its takeover of ABN Amro.

AFP