European equities showed an early bounce from yesterday's losses, led by Wall Street's gain last night.

The key event today will be the 1230 GMT release of US unemployment statistics for May.

Frankfurt

German shares rallied in morning trading with the DAX up 92.52 at 5685.

Traders were waiting for US labour market data and Vickers shareholders' meeting that will decide on Volkswagen's bid for Rolls-Royce Motor Cars.

"A positive decision for VW should support BMW shares because it means that BMW won't face the huge costs of acquiring Rolls-Royce," said Christoph Hodina, trader for Bayerische Hypotheken & Wechsel Bank.

"The consequences for VW shares will depend on the terms of the transaction, particularly how much VW would have to pay for Rolls-Royce's brand name," he added.

Paris

Buoyed by a rebounding dollar and a hearty finish on the New York Stock Exchange, French stocks also headed higher.

The CAC-40 stood at 4,162.53 up 43.50 by late morning.

"The dollar is doing better, Wall Street finished up" and the fact that the market resisted downward pressures fairly admirably yesterday added to the outlook, a salesman at Transbourse brokerage house said.

Market players said they expect volumes to remain low until the US's unemployment statistics are released in mid-afternoon.

Telecommunications company Alcatel Alsthom remained subdued after yesterday's 9.5% tumble following news it is to acquire US company DSC Communications.