European shares bounced higher on Friday as a rebound in crude prices bolstered oil stocks and investors snapped up technology stocks.

In late morning trade, the FTSE Eurofirst 300 added 2.3 per cent to 878.24 after two days of sharp falls, while the CAC 40 in france added 2.1 per cent to 3,247.89 and Germany's Xetra Dax gained 3.3 per cent to 4,770.43. In London, the FTSE 100 jumped 2 per cent to 3,244.31 after touching a five-and-a-half year low in the previous session.

Crude oil rose almost $1.70 to $71.50 a barrel amid growing expectations of an Opec production cut.

Norway's StatoilHydro jumped 5.7 per cent to NKr110.40, France's Total gained 5 per cent to €34.86 and Austria's OMV rose 0.9 per cent to €24.12.

Finnish mobile phone giant Nokia and German software company SAP led a rally in European technology stocks after a better-than-expected outlook from Nokia on Thursday and robust third-quarter results from Google and IBM overnight. Nokia climbed 8.9 per cent to €12.30 while SAP rose 8.8 per cent to €27.65.

Germany's BMW was boosted by an upgrade from Goldman Sachs. The carmaker rose 3.5 per cent to 20.32 after the brokerage raised its target price from €29 to €33 saying the impact of recession was already priced into the stock. Rival Daimler added 9.4 per cent to €27.76.

It was a mixed picture in the banking sector with Franco-Belgian Fortis up 5.3 per cent to 0.91 and Germany's Deutsche Bank rising 4.5 per cent to €33.27 and Deutsche Postbank up 9 per cent to €22.95 while French banks slid with BNP Paribas fell 4.9 per cent to €52.25 and Société Générale down 3 per cent to €43.18.