Stock markets bounced back Thursday after upbeat U.S. jobs figures helped shore up sentiment, a day after investors were rattled by the European Central Bank's huge loans to bolster the continent's banks.
As the traditional holiday slowdown began in earnest, investors took heart that the number of initial jobless claims in the U.S. unexpectedly fell 4,000 to 364,000, the lowest level since April 2008. A fairly upbeat U.S. consumer confidence survey from the University of Michigan helped sustain the positive sentiment before the European close.
The figures provided further evidence that the U.S. economy, the world's largest, has gotten through its soft patch earlier this year and may be poised for stronger-than-anticipated growth in the fourth quarter.
However, another U.S. government figure showed that the U.S. economy didn't fare as strongly in the third quarter as previously thought. It said growth was an annualized rate of 1.8 percent, down from the previous estimate of 2 percent.
"Investors appear willing to trade today's downgrade in the rear-view mirror for improving prospects ahead across the labor market into next year," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York. "And let's not forget that the anecdotal evidence suggests record holiday spending, which means that fourth-quarter growth is likely to be robust."
In Europe, the FTSE 100 index of leading British shares closed up 1.3 percent at 5,456.97 while Germany's DAX rose 1.1 percent to 5,852.18. The CAC-40 in France ended 1.4 percent higher at 3,071.80.
The euro was also holding its own, trading 0.1 percent higher at $1.3045.
In the U.S., the Dow Jones industrial average was up 0.3 percent at 12,139 while the broader Standard & Poor's 500 index rose 0.5 percent to 1,249.
The optimism in the markets Thursday stood in contrast to developments the previous day, when investors were spooked by the huge size of the ECB's euro489 billion ($639 billion) three-year loans Wednesday to 523 banks. It was the ECB's biggest credit infusion to date as authorities try to steady a financial system under severe pressure from Europe's debt crisis.
Although the loans will help make sure banks have enough money to lend next year, they don't address Europe's underlying problem of too much government debt.
Asian markets traded lower following the previous day's retreats in Europe and the U.S. Investors were hoping that Beijing eases curbs on bank lending and real estate sales to revive slowing economic growth, but analysts expected no immediate changes.
"If expectations of an easier monetary policy do not materialize, the market will remain unstable, but even if some loosening does emerge, the room for gains is still quite limited," said Liu Kan, an analyst at Guoyuan Securities in Shanghai.
Tokyo's main index declined 0.8 percent to 8,395.16 and China's benchmark lost 0.2 percent to 2,186.3. South Korea's Kospi was down 0.1 percent to 1,847.49.
In the oil markets, trading was lackluster with benchmark crude for February delivery up 98 cents at $99.65 in electronic trading on the New York Mercantile Exchange.
Joe McDonald in Beijing contributed to this report.