LONDON, March 2: Stocks ended the week on a firm note in Europe on Friday as retail leader Carrefour sailed ahead amid further signs the US economy the world’s biggest is recovering to help put corporate profits back on an even keel.

The good economic news emboldened investors to buy broad swathes of shares, with economy-sensitive cyclicals like autos, retailers, basic producers, chemicals and industrials doing particularly well.

A five percent jump in Britain’s BT helped telecoms.

The pan-European Eurotop 300 index closed up 1.1 per cent at 1,238.68 points. It was up 4.5 per cent for the week, cutting its loss for the year to less than two percent.

Europe and Wall Street extended their gains after data showed that US manufacturing snapped out of its deepest slump in a decade in February as factories ramped up activity for the first time since July 2000.

The US Institute of Supply Management said its monthly index rose to a higher-than-expected 54.7 from 49.9 in January, breaking above the 50-point level to indicate expanding factory activity after 18 months of decline.

Separately, US consumer and construction spending were robust in January, though consumer sentiment stumbled in February.

European investors appeared more willing to look past bad corporate news to a recovery as the year unfolds, though some fund managers remained cautious about the vigour of any pick-up.

The big question is even if the economy expands, will profits expand likewise, said Chris Woods, chief investment officer at State Street Global Advisors in London where the firm manages about $60 billion in largely European assets.

What we need as equity investors is proof the better economic news is feeding through to earnings. We may be just seeing an inventory correction coming to an end, but that does not say there will be great demand for new products, Woods said.

After the Enron scandal, companies will be more conservative in how they present profits in future, Woods said, adding that Europe’s stock market was likely to remain inside its four-month old trading range for a while yet.

With most of Europe shut, the Dow Jones industrial average was up 1.6 per cent at 10,269 points, while the tech-laden Nasdaq Composite had soared 2.4 per cent.

The Euro Stoxx 50 index of euro zone blue chips ended up 0.6 per cent at 3,645.33 points, its fifth day of gains.

Europe’s economy still looks mixed, with data on Friday showing manufacturing expanding in Britain and Italy, while France and Germany are still trying to recover.

Shares in French Carrefour, the world’s second biggest supermarket group, rose four percent in anticipation the group will post a 14 per cent rise in 2001 net profit next Wednesday, though analysts said the firm’s outlook will be key.

Merrill Lynch said it expects Carrefour to forecast a minimum of 15 per cent growth in net income, after goodwill, for 2002, and anything lower would prompt the US brokerage and bank to “revisit” its investment case.

Helping the chemical sector, Britain’s Imperial Chemical Industries rose six per cent after the firm said the Superior Court of Rhode Island had dismissed its US unit Glidden from a lawsuit over lead in paints.

Many of the automakers were strong as they stand to benefit from economic recovery. DaimlerChrysler, which owns the US Chrysler carmaker, was up three per cent. Shares in British Airways climbed 6.6 per cent after analysts reported postive feedback from recent meetings with investors, with prospects of a better US economy also helping.—Reuters