Bareksa.com - European shares headed back towards multi-year highs on Thursday, as a jump in U.S. employment growth and further signs of support from the European Central Bank (ECB) lifted equities.

The pan-European FTSEurofirst 300 index closed up around 1 percent at 1,398.24 points, a whisker away from the 6-1/2 year high of 1,399.62 points reached in late June.

The euro zone's blue-chip Euro STOXX 50 index rose 1.2 percent to 3,289.75 points while Germany's DAX advanced 1.2 percent to 10,029.43 points - close to a record high of 10,050.98 points hit last month.

European stock markets extended earlier gains after data showed that U.S. employment growth rose in June and the jobless rate had closed in on a six-year low.

The ECB also helped the mood, as it held interest rates at record lows.

ECB president Mario Draghi said a raft of measures introduced last month would help lift inflation and support bank lending, and added the ECB was ready to create money in future if required.

"I see very strong European and U.S. bull markets," said Andreas Clenow, hedge fund manager and principal at ACIES Asset Management in Zurich.

Willem Sels, HSBC Private Bank's UK head of investment strategy, preferred European equities to the U.S. stock market, mainly on valuation grounds.

"Regionally, we think that European stock markets will continue to benefit from their discount relative to the U.S. and that the valuations gap will close," he said.

According to Thomson Reuters StarMine data, the pan-European STOXX 600 index is trading on a 12-month forward price-to-earnings ratio of 14.5 - representing a slight discount to a similar P/E ratio of 15.9 for the U.S. S&P index.

Many investors expect more gains for European shares later this year, as the ECB's measures help offset lingering signs of weakness within the euro zone.

"I don't see any catalyst to have a negative view on equities," said Luc Bocahut, portfolio manager at Monaco-based Tiverton Trading. (Source : Reuters)