File picture: Alex Grimm

London - World shares hit their highest level since June 2008 and the dollar touched a fresh 3-1/2-year high against the yen on Friday, ahead of US jobs data expected to point to a continuing pick up in the world's biggest economy.

China also gave markets a boost as official data showed February exports grew 21.8 percent versus a year ago, more than double the expected rise.

European shares, which have rebounded strongly this week after last week's Italian election and US spending cuts-related wobble, opened up 0.5 percent. That put them on track for their biggest gains since the opening week of the year.

In Asian trading Japan's Nikkei had hit a 4-1/2 year high and the 0.5, 0.6 and 0.5 opening rises by London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX helped MSCI's world share index to its highest level since late June 2008.

“There appears to be a strong risk-on mood in the market at the moment,” said Ken Wattret, co head of European market economics at BNP Paribas.

“The negativity from the Italian elections was shrugged off pretty quickly, the Fed has made it clear that its policy will remain accommodative. If we get a get a good set of payrolls numbers, that will further fuel that sentiment.”

In the currency market, a sudden spike in tensions between North and South Korea added to the broader US growth-led demand for the dollar.

The euro eased 0.1 percent, but clung to the bulk of the gains made the previous day, after the European Central Bank wrong-footed investors who had positioned for a more clear-cut signal on rate cuts from its head Mario Draghi.

Friday's US payrolls report, due at 15:30 SA time, is key to gauging the Federal Reserve's policy course as the Fed will keep its near-zero rate stance until the unemployment rate falls to 6.5 percent, as long as inflation does not threaten to top 2.5 percent.

A Reuters survey of economists shows US employers are expected to have added 160,000 jobs last month, picking up slightly from January's 157,000 count.

With demand for low-risk assets cool ahead of the data, German Bund futures steadied at 142.87 as European trading gathered pace. They had fallen the previous day after the ECB's less dovish than expected tone.

“We saw yesterday after the initial (unemployment) claims in the US and (ECB President Mario) Draghi's comments that not only Bunds but also Treasuries were under downward pressure so maybe there's already some positioning for a strong payrolls number,” said Piet Lammens, a strategist at KBC. - Reuters