European share prices snapped a three-day losing run on Friday to end the first three months of the year up 6.8 percent, the biggest first-quarter gain since 2006, after eurozone finance ministers agreed to boost rescue funds for the member nations.
Mining and steel stocks led the risers, with Anglo American and ArcelorMittal both up 1.7 percent, boosted by rising base metal prices. Auto stocks - the best performing sector so far this year with a gain of nearly 30 percent - also featured among the biggest gainers on Friday, with Daimler adding 2.4 percent and BMW 2.8 percent.
The FTSEurofirst 300 index of top European shares ended up 0.9 percent at 1,069.03 points, while the blue chip Euro STOXX 50 won 1 percent at 2,477.28 points. Around Europe, UK's FTSE 100 index was up 0.5 percent, France's CAC 40 up 1.3 percent and Germany's DAX index up 1 percent, enjoying its strongest first-quarter performance since 1998.
"The quarter comes to an end with a positive finish for European equities, maintaining their presence in the recent range, albeit near the bottom," said Will Hedden, sales trader at IG Markets. Spain announced deep cuts to its central government budget on Friday, targeting savings of 27 billion euros ($36 billion) for the rest of 2012 from the central government budget, equivalent to around 2.5 percent of gross domestic product.
Investors' risk appetite, measured by the Euro STOXX 50 volatility index known as the VSTOXX, sharply recovered, with the VSTOXX falling 11 percent, to 22.55. For Valerie Gastaldy, head of Paris-based technical analysis firm Day By Day, the fact that implied volatility remains relatively low despite the two-week pullback shows that investors are increasingly complacent.