* STOXX Europe 600 index roughly steady
* FTSE set for 5th week of gains
* U.S. non-farm payrolls disappoint, but earnings strong
* Nets drops following downgrade
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By Alistair Smout and Atul Prakash
LONDON, Jan 6 European stocks rallied from lows
on Friday after a stronger than anticipated increase in earnings
in a flagship U.S. jobs report made up for a
weaker-than-forecast payrolls figure.
The benchmark STOXX 600 index posted its best
weekly performance since the middle of December as it turned
higher following the non-farm payrolls report.
U.S. employment increased less than expected in December but
a rebound in wages pointed to sustained labor market momentum
that sets up the economy for stronger growth and further
interest rate increases from the Federal Reserve this year.
The STOXX 600, which had been down 0.4 percent ahead of the
data, closed down just 0.1 percent.
Britain's commodity-heavy FTSE 100 index ended up
0.2 percent, and posted its highest closing level ever. It also
posted a fifth straight week of gains.
The STOXX 600 remained 0.4 percent down from a one-year high
set earlier this week, but was still up 1.1 percent this week.
The index is up around 12 percent from November's lows, as
investors have bet that the election of Republican Donald Trump
as U.S. president might result in fiscal stimulus, buoying
growth and inflation globally.
"The big upward revision to November and a 2.9 percent
increase in average hourly wages are going to be enough to let
markets keep their faith in the Trump reflation trade, and the
U.S. Federal Reserve plans further interest rate increases,"
said Russ Mould, investment director at AJ Bell.
Precious metals miners Fresnillo and Randgold
Resources fell 3.5 percent and 2.8 percent respectively
after gold slipped from one-month peaks, hindered by dollar
UBS analyst Daniel Major stayed positive on the sector's
outlook. "Despite the uncertain gold price backdrop, looking
into 2017 the European gold miners are in good shape from a cost
and balance sheet perspective," he said.
Large-cap gold miners including Randgold and Fresnillo also
faced less pressure than some of their peers to lift capex to
replace depleting reserves and offset declining production over
the next 2-3 years, he said.
Danish payments firm Nets dropped 3.1 percent and
heading for its biggest decline since its IPO in September after
a downgrade to "sell" from "hold" by Danske Bank.
Shares in Fiat Chrysler Automobiles gained 7
percent, the biggest riser in the STOXX 600 index, after Goldman
Sachs added the stock to its "Conviction List" and raised its
target price to 16.5 euros from 9.9 euros.
"In our view the market significantly underappreciates FCA's
ability to improve its NAFTA (North America) price-mix via
shifting production away from mass-market cars and into more
profitable vehicles," Goldman Sachs analysts said in a note.
(Editing by Mark Heinrich)