LONDON Jan 4 (Reuters) - European shares extended gains to set a new 22-month high on Friday, buoyed by supportive U.S. economic data and led by rig contractor Transocean.
The FTSEurofirst 300 index of top European shares provisionally ended 0.2 percent higher at 1,165.21 points, its highest closing level since early 2011.
"You have got a reduction in the tail risks that have been worrying people. Lower risks, combined with a likely upside earnings potential, make us positive on the market," Graham Bishop, senior equity strategist at Exane BNP Paribas, said.
The risks of a U.S. "fiscal cliff", a Chinese hard landing and a breakdown of Europe had diminished following strong actions by the authorities, he said, adding the fourth-quarter earnings season should be slightly better because the macroeconomic situation had been improving.
Latest data showed the vast U.S. services sector grew at its fastest clip in 10 months in December, boosted by a rise in new orders, while U.S. jobs outside the farming sector grew by 155,000 last month, slightly higher than analysts' expectations.
Transcocean led gainers, up 5.9 percent, after it reached a deal late on Thursday with the U.S. Department of Justice to settle claims related to the giant BP oil spill in the Gulf of Mexico. BP stock, meanwhile, rose 2.7 percent.