Davies will hope to kickstart his career at Craven Cottage
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Simon Davies has joined Fulham from Everton for an undisclosed fee.
The Welsh international midfielder, 27, was deemed surplus to requirements at Goodison Park and is keen to get started on a deal that runs until 2010.
"The style of play that manager Chris Coleman has developed here will suit my game," he told the club's website.
Davies joined Everton from Tottenham for £3.5m in May 2005 and has made 53 appearances, scoring a solitary goal in a spell hindered by injuries.
"I'm really happy to have joined Fulham as Chris is a manager I know and admire very much," added Davies.
"I've wanted to come back to London for a while now so it's a good move for me, and I'm eager to train hard and contribute as much as I can to the rest of the season's campaign."
Coleman expressed delight at boosting his squad with the capture of fellow Welshman Davies.
"Simon will fit in really well here, is a player I have admired for a long time and obviously I know him well because of the Welsh national team," he said.
"He is a versatile player; he can play centre midfield, wide right and right-back, so we have the option of utilising him in a number of positions.
"He is a very good passer of the ball with a great engine.
"And he's at a good age. I think his best years are still to come, and I'm confident that he will do well for us."
Davies performed well in Everton's 2-0 weekend win at Wigan, his 17th appearance of the season for the Toffees.
He has made 13 Premiership starts for the Merseyside club this term.