[LONDON] European shares posted their biggest daily gain since June 2016 as buoyant US job data and hopes of better Sino/US trade relations boosted shares after a gloomy week during which a rare revenue warning from Apple caused havoc.

Federal Reserve Chairman Jerome Powell also reassured investors concerned about a US economic slowdown, saying the central bank would be sensitive to the downside risks currently priced in the market.

Europe's Stoxx 600 rose 2.8 per cent, with strong gains across the region's bourses.

"A solid set of job numbers and some comfortable words from the chairman of the Federal Reserve have been just the ticket to get markets into bullish mode", said IG analyst Chris Beauchamp.

Stocks sensitive to trade tensions led the gains.

Mining companies jumped 5.4 per cent, the top gainer as copper prices recovered on news of new trade talks between China and the United States.

Autos, which suffered in 2018 from the trade dispute, jumped 4.5 per cent.

Oil stocks also rallied close to 3 per cent, getting a lift from rising oil prices and a survey showing China's services sector expanded in December.

Outside trade-related moves, Bayer shares climbed 6.7 per cent. A ruling by a US judge could restrict evidence favoring the plaintiffs in lawsuits alleging Bayer's glyphosate-based weed killer causes cancer.

Tech stocks, which plunged 4 per cent after Apple's revenue warning, rose 2.85 per cent.

Chipmaker AMS, which provides the facial recognition technology used in the latest iPhone, rose 4 per cent - a modest recovery after Thursday's 23 per cent plunge.

ProsiebenSat 1 shares fell 3.4 per cent after Morgan Stanley cut its price target on the stock, in a negative note on European TV highlighting rising competitive pressure from subscription video on demand platforms.

As the fourth-quarter results season approaches, analysts remain pessimistic about European earnings. They have cut earnings forecasts continuously since September 2018.

Edward Park, deputy chief investment officer at Brooks Macdonald, said he was slightly "overweight" on equities, expecting an economic slowdown but not a contraction.

"If we're going to see moderate growth in 2019 but nothing too exciting, are market participants willing to be outside risk assets for that entire time?"

REUTERS