European stocks ended sharply higher on Friday, lifted by a rebound in financial shares on the prospect that US investment bank Lehman Brothers might be bought.
Influential investor Warren Buffett also boosted sentiment by saying that stocks looked more attractive now than they did a year ago.
Mr Buffett said that although he did not expect the US economy to be any better five months from now, stocks are a better deal than they were.
Oil eased to around $US118 a barrel.
The pan-European FTSEurofirst 300 index ended up 1.8% at 1,175.79.
State-run Korea Development Bank said Lehman was one of its options for acquisitions, reviving expectations that the US investment bank might still bring in a large investor.
A newspaper reported on Thursday that Lehman sought to sell up to a 50% stake to China's biggest brokerage, CITIC Securities, or to KDB. But the two Asian companies walked away after deciding the asking price was too high.
Around Europe: Germany's DAX index rose 1.7% and France's CAC 40 added 2.2%. The Swiss market index closed up 1.34%.
In Britain, the FTSE 100 was up 135.4 points, 2.5% at 5,506.6. The index gained 0.6% for the week but is still down 15% for the year.
Banks rose after US Federal Reserve Chairman Ben Bernanke said the recent decline in commodity prices and the stabilisation of the dollar were encouraging.
NZ market down
The NZX 50 index was down 20 points to 3311 on turnover of $82 million.
Telecom was down 5 cents to $3.23, Contact Energy dropped 18c at $8.42 and Fletcher Building rose 4c at $7.20.
Michael Hill International was up 4c to 95c after saying it'll spend $7 m expanding into the US.
Fisher & Paykel Healthcare improved 13c after forecasting a 38%rise in first-half profit to the end of September.
Port of Tauranga was up 5c at $7.10 after saying it'll expand its container operation to meet steadily increasing demand for cargo.
Turners Auctions unchanged at 85c after its half year profit rose 55% to $812,000.
Auckland International Airport Ltd was unchanged at $2.01 after underlying profit rose 3% to $113m in the year to June on Thursday.
Mainfreight fell 2c to $7.10 after profit rose 40% to $8.2m in the June quarter.
New Zealand Oil & Gas rose 5c to $1.51 but The Warehouse was down 4c to $3.45.
In currency markets: the New Zealand dollar was trading at US71.87 cents, 81.73 Australian, 38.33 pence, 78.31 yen and 0.4831 euro. The Trade Weighted Index was at 66.54.
Australian market rises
The 200 index closed firmly in the black. It was up 56.2 points, or 1.15%, to 4,931.4, while the broader All Ordinaries gained 60.6 points, or 1.22%, to 5,010.2.
The September share price index futures contract was 58 points higher at 4,902 on volume of 21,409 contracts.