* FTSEurofirst 300 up 0.9 pct, Euro STOXX 50 up 1.4 pct
* Euro STOXX 50 posts biggest weekly gain since Nov
* Valuation ratios getting pricey -BNP Paribas IP
* Fitch downgrades Italy after Europe's closing bell
By Blaise Robinson
PARIS, March 8 (Reuters) - European shares hit their highest
level in 4-1/2 years on Friday after robust U.S. jobs data
fuelled expectations of a pick-up in global growth while central
banks' keep policy supportive.
The FTSEurofirst 300 index of top European shares
closed 0.9 percent higher at 1,195.20 points, after rising as
high as 1,197.73 following the U.S. data, a level not seen since
The euro zone's blue-chip Euro STOXX 50 index
added 1.4 percent to 2,728.78 points, posting a weekly gain of
4.3 percent, its biggest weekly rise in nearly four months.
"We're seeing growing inflows coming into the asset class.
This is sort of a sweet spot, with improving U.S. job data while
central banks around the world are pledging to keep printing
money," said David Thebault, head of quantitative sales trading
at Global Equities in Paris.
The U.S. data showed employers added 236,000 workers to
their payrolls last month, much more than the forecast of
160,000 jobs economists had expected, while the jobless rate
fell to 7.7 percent, the lowest rate since December 2008.
The figures, however, were not enough to spur concerns that
the U.S. Federal Reserve could call a halt to bold measures to
support the economy, such as its programme of bond-buying, or
begin to raise ultra-low interest rates anytime soon.
"Any number above 200,000 shows that the U.S. is on a strong
growth path. And it's too early for markets to be worrying about
quantitative easing being wound down," James Butterfill, global
equity strategist at Coutts, said.
"I don't think it's really going to change the Fed's
accommodative stance at this point. An unemployment rate falling
to 7.7 percent from 7.9 is a step in the right direction, but
with the Fed looking at 6.5 percent, I think it will need to get
down to 7 percent for there to be growing pressure to adopt a
more hawkish stance."
The broad rally following the data prompted some investors
to seek out areas of relative value in Southern Europe, which
had suffered again recently from a resurgence of political
Italy's FTSE MIB benchmark index and Spain's IBEX
chalked up the biggest gains, surging 1.6 percent and
2.9 percent, respectively, led by leading banks and telecoms
such as Telefonica and UniCredit, up 4.2
percent and 2.8 percent.
European banking shares also featured among the biggest
gainers, with France's BNP Paribas adding 4.1 percent,
and Raiffeisen Bank gaining 2.6 percent.
The lofty gains in Southern Europe could be short lived,
however, after a credit rating downgrade of Italy by Fitch after
Europe's closing bell.
Worries over the debt-stricken country, where elections last
week left no party grouping with enough support to form a
durable government, prompted a substantial but short-lived
correction to this year's bull run at the end of February.
Around Europe, UK's FTSE 100 index added 0.7
percent, Germany's DAX index gained 0.6 percent, and
France's CAC 40 climbed 1.2 percent.
Wall Street's Dow Jones industrial average hit an
all-time high this week while both the DAX and FTSE 100 passed
peaks last seen at the time of the 2008 financial crisis.
The question many analysts are asking, however, is whether
the boom is due largely to the flow of cheap money from major
central banks rather than any more durable recovery in the
economy and business.
"Some valuation ratios are getting a bit excessive, although
we're not yet at a stage where equities are overvalued," said
Joost van Leenders, strategist at BNP Paribas Investment
Partners, which has 503 billion euros ($653 billion) in assets
"U.S. and the UK stocks are getting expensive, especially
when you look at the macro fundamentals, while the euro zone is
probably the only region where you still see relatively cheap
The Euro STOXX 50 index trades at 10.3 times earnings
expected in the next 12 months, compared with a
price-to-earnings ratio of 13.4 for Wall Street's S&P 500
, according to Thomson Reuters Datastream.