The advance in Europe follows big gains on Wall Street Thursday, which helped support most markets in Asia.
However, wild swings over recent days, with shares often changing direction every few hours, highlight how volatile trading is at the moment amid concerns over the global economy and the levels of debt in both the U.S. and Europe.
In Europe, London's FTSE 100 was up 1.1 per cent at 5,221 points, while Germany's DAX was 1.9 per cent higher at 5,908. The CAC-40 in France was 1.2 per cent higher at 3,126 even after data showed the French economy did not grow in the second quarter.
Wall Street was poised for a modest retreat after Thursday's big gains — Dow futures were down 0.6 per cent at 11,021 while the broader Standard & Poor's 500 index fell a similar rate to 1,161.
The gains in Europe came after regulators in France, Italy, Spain and Belgium imposed temporary bans on short-selling of financial shares late Thursday, following sharp selloffs and temporary gains in French bank shares in particular that they said were fueled by false rumours.
The share prices of French banks, which fluctuated sharply in recent days appeared to stabilize Friday, with Societe General up 1
1.3 per cent and Credit Agricole up 0.3 per cent. Belgium's Dexia was doing particularly well, trading 5.8 per cent higher.
However, analysts questions whether the short-selling banks would be successful in the long run, since many experts claim that a similar move in 2008 actually contributed to investor uncertainty.
"With deteriorating investor confidence in euro-zone debt likely to continue driving reduced investor confidence in European banks' ability to withstand the fallout from the euro-zone debt crisis; we doubt that downward pressure on European financials will now dissipate," said Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ.
The gains in Europe came despite figures showing France's economy unexpectedly ground to a halt in the second quarter on the back of a sudden reversal in consumer spending and stagnation by the country's exporters.
The halt in the French economy is set to exacerbate concerns over the eurozone in general, where the three bailout countries of Greece, Ireland and Portugal are in recession and Italy and Spain struggle with lacklustre growth.
France is already facing speculation that it may soon lose its AAA-rating due to its high debt load.
"With the economy stagnating and elections coming up next spring, it will be extremely difficult to implement the aggressive austerity measures that are needed to convince markets that the government finances are on a stable footing," said Jennifer McKeown, senior European economist at Capital Economics.
The euro was also seemingly unaffected by the French data, trading 0.1 per cent higher at $1.4231.
Earlier in Asia, the session was far less volatile than of late.
Hong Kong's Hang Seng added 0.1 per cent to 19,620.01. Australia's S&P/ASX 200 gained 0.8 per cent to 4,237.90, while benchmarks in New Zealand and Singapore also rose.
But Japan's Nikkei 225 stock average was lower — closing down 0.2 per cent to 8,963.72 after spending the morning in positive territory. A stronger yen, which reduces the value of profits earned overseas, pummeled export shares.
The dollar is trading around the 76.50 yen mark, which is not far off the levels that prompted the Bank of Japan to intervene directly in the markets to stem the export-sapping appreciation of the yen.
Mainland Chinese shares, however, traded higher for a fourth day, with the absence of bad news helping boost sentiment, traders said. The Shanghai Composite Index gained 0.5 per cent to 2,593.17 while the Shenzhen Composite Index gained 1 per cent to 1,158.96.
In the oil markets, prices fell as traders booked some profits garnered over the previous session, when crude rose 3.4 per cent.
Benchmark oil for September delivery was down 55 cents at $85.17 a barrel in electronic trading on the New York Mercantile Exchange.