European stock markets gained in thin trading on Friday, with Frankfurt hitting another record high, while the dollar surged to a four-year record above 101 yen owing to positive US labour market data, analysts said, and as finance ministers from industrialised countries met in Britain.
Frankfurt's DAX 30 (Xetra: ^GDAXI - news) set a fourth straight record high as it gained 0.19 percent to 8,278.59 points and in Paris the CAC 40 (Paris: ^FCHI - news) was 0.64 percent higher at 3,953.83 points.
"The rise is generated above all by massive liquidity pumped into the system by central banks," rather than by economic factors, said Olivier Noel, a broker at Turgot Asset Management.
"Some investors holding lots of cash lost patience when they did not see the market drop, and invested even though the market is expensive," he added.
Meanwhile, in Aylesbury, northwest of London, finance ministers and central bank chiefs from the Group of Seven (G7) industrialised economies gathered for two-day talks on spurring growth, with foreign exchange factors expected to feature in the discussions.
On forex markets, the dollar jumped to 101.76 yen, from 100.55 yen late on Thursday in New York, a level last seen in October 2008.
The euro changed hands for $1.2953, down from $1.3044 on Thursday, after falling as low as 1.2936, its lowest level since April 5.
Top representatives from the European Union and International Monetary Fund also attended the G7 talks.
"Our task is to nurture the recovery," British finance minister George Osborne said as he opened the gathering amid pressure on Britain and other indebted European nations to scale back deep cuts to state spending, in order to support fragile growth.
Earlier in the day, markets had welcomed a US Department of Labor report released on Thursday that showed fewer unemployment benefits claims than expected, but trading in New York slumped on Friday after Federal Reserve chairman Ben Bernanke warned that officials will not always be able to identify risks such as potential asset bubbles.
US markets were mixed in midday trading, with the Dow Jones Industrial Average falling by 0.17 percent to 15,057.39 points.
The broad-based S&P 500 was flat at 1,626.53, while the tech-rich Nasdaq Composite Index increased by 0.30 percent to 3,419.28.
On forex markets meanwhile, the greenback has soared against the yen also owing to Tokyo's aggressive stimulus efforts to lift the Japanese economy, which have had the effect of pushing its currency lower, thus providing support for Japanese exports.
"The move above 100 yen was always on the cards," said Kathleen Brooks, research director at trading firm Forex.com.
She pointed to the G7 meeting and added: "It will be interesting to see if they say anything about the speed of the yen's decline."
Last month, G20 nations approved aggressive stimulus by Japan, despite criticism in Europe that Tokyo is deliberately forcing down the yen's value to help exporters.
Japan maintains that the policy is aimed at boosting growth and overcoming deflation.
In Asia on Friday, the Tokyo stock market rallied to its highest level in more than five years as the dollar surged versus the yen.
Tokyo jumped 2.93 percent to finish the week at 14,607.54 points, while Sydney gained 0.15 percent, Shanghai increased 0.62 percent and Hong Kong added 0.47 percent.
On the London Bullion Market, gold fell to $1,426.50 an ounce from $1,465 on Thursday.