Banks lift European shares to 4-month highs

LONDON, Aug 3 (Reuters) - European shares rose to their highest level in four months on Friday, led by gains in bank stocks, as investors said that the European Central Bank's pledge to tackle the region's debt crisis had bought breathing space for troubled economies.

Stronger-than-expected U.S. jobs data on Friday also lifted sentiment towards equity markets.

The FTSEurofirst 300 index provisionally closed up 2.4 percent at 1,080.30 points, which would mark its highest closing level since ending at 1,085.04 points on April 2. It also posted its ninth weekly gain in a row, extending its longest run of weekly rises since mid-2005.

The Euro STOXX 50 index rose 4.6 percent to 2,366.88 points.

The FTSEurofirst 300 fell 1.2 percent on Thursday after European Central Bank chief Mario Draghi initially disappointed some investors by not announcing any immediate actions to help lower the borrowing costs of debt-laden Spain and Italy.

However, traders said on Friday that Draghi's comments that the ECB was ready to start buying government bonds nevertheless signified that new stimulus measures could arrive soon, giving a boost to the battered Spanish and Italian equity markets.

"It does give Spain and Italy an ultimate parachute should things go really ugly. This should be seen as a positive development," said Emanuel Arbib, head of Integrated Asset Management.