European Stocks Climb

LONDON—European stock markets rallied after another round of data, including Friday's surprisingly strong U.S. jobs report, suggested that the economic recovery remains on track.

The Stoxx Europe 600 index jumped 1.7% to 264.60, its highest close since July 29. It soared 3.6% for the week, its best weekly showing in two months.

The U.S. Labor Department said 243,000 jobs were added to nonfarm payrolls in January and the unemployment rate fell to 8.3% from 8.5% in December. Economists surveyed by MarketWatch expected a payrolls increase of 121,000 and an unchanged jobless rate.

Markets were also supported by the euro-zone composite purchasing manager's index confirming growth in private-sector activity in January. The index rose to 50.4 in January from 48.3 in December, confirming an earlier preliminary estimate. A reading above 50 indicates growth in activity.

"The crisis is not as deep as feared and that's important for the stock market. People were getting pessimistic last year, but in hindsight it was overdone," said Koen De Leus, strategist at KBC Securities.

Among Friday's biggest movers, banking-software provider Temenos Group surged 16% in Zurich after U.K. software group Misys confirmed the two companies are in preliminary talks over a potential merger. Misys gained 1.3% in London.

Bekaert sank 6% a day after the Belgian steel cord manufacturer said Thursday it would lay off 600 employees to reduce global production costs.

The German DAX 30 index rose 1.7% to 6766.67, its highest close since Aug 2. The index climbed 3.9% over the week, extending its weekly string of gains to seven.

Car maker and index heavyweight Daimler rallied 3.1% after it said global sales of its Mercedes-Benz car brand rose 5.8% in January, helped by strong U.S. sales and gains in Japan. Shares of rival BMW rose 2.9%.

Among other major national benchmarks, the U.K.'s FTSE 100 index jumped 1.8% to 5901.07, its highest close since July 26, and the French CAC 40 index rose 1.5% to 3427.92, its best finish since Aug. 3.

But Greece's ASE Composite index slid 3.8% to 762.15, as the country's finance minister said talks with international creditors are proving "very difficult." Euro-zone finance ministers canceled a meeting that had been set for Monday to discuss Greece's second bailout. National Bank of Greece plunged 9.3%.

"If they solve the [debt-restructuring] problem, they still have to implement austerity measures, so I don't see a good outcome for Greece," Mr. De Leus said. "I'm pretty sure this debt problem will not be solved for the next five to six years."

Banking shares elsewhere surged; the sector's moves recently have tended to magnify the broader market's direction. Société Générale jumped 7.3%, Crédit Agricole advanced 4.7% and BNP Paribas rose 3.2%, all in Paris.

Banco Popolare added 5.2% in Milan, KBC Group leapt 8.6% in Brussels and UBS advanced 3.4% in Zurich. Lloyds Banking Group rallied 5.1% and Barclays gained 4.2%, both in London.

The U.K.'s FTSE 100 index jumped 1.8% to 5901.07, and the French CAC 40 index rose 1.5% to 3427.92.

Insurance firm Admiral Group surged 7.9% after announcing an extension of its existing U.K. car insurance reinsurance partnerships into 2014.

U.K. telecommunications firm BT Group rose 3.9% on its quarterly earnings report. It also said it will meet some of its earnings targets a year earlier than expected.

In Sweden, Volvo climbed 4.4% on forecast-beating fourth-quarter profit and sales.

Write to Sara Sjolin at sara.sjolin@dowjones.com