U.S. jobs optimism helps European shares extend rally

* FTSEurofirst 300 up 0.3 pct

* Market whispers of good U.S. non-farm payrolls

* ArcelorMittal (Other OTC: ARCXF - news) top gainer after raises profit forecast

* Skanska (Other OTC: SKBSY - news) drags after orders lag

By Alistair Smout

LONDON, Feb 7 (Reuters) - European shares rose for a second straight day on Friday, supported by hopes that jobs data later in the session would reveal a brightening picture for the U.S. economy.

Investors were hopeful that U.S. employment figures would show signs of improving economic growth, after Thursday's encouraging initial jobless claims data fuelled strong gains on Wall Street.

While Thursday's data has no direct bearing on January's employment report, as it falls outside the survey period, it boosted the outlook for the world's largest economy.

"The initial jobs report has increased optimism and I think the non-farm payrolls number will be bullish later," Mark Ward, head of execution trading at Sanlam Securities, said.

"However, if it is a bad number, I think we will see a pretty harsh sell-off."

Non-farm payrolls are expected to have increased by 185,000 last month, according to a Reuters survey of economists. This would offer assurance that economic growth was not faltering.

Chatter in the market was of an even higher number, however, with Goldman Sachs (NYSE: GS-PB - news) predicting 200,000 and Societe Generale (Paris: FR0000130809 - news) looking for 270,000.

The pan-European FTSEurofirst 300 was up 0.3 percent at 1,293.85 at 1111 GMT, building on the previous session's 1.5 percent rally, which was the biggest daily gain since mid December.

Leading gainers were basic material stocks such as industrials and miners, which are sensitive to optimism over the global economy.

Heavyweight steelmaker ArcelorMittal (Other OTC: AMSYF - news) - regarded as a gauge for the health of global manufacturing - was the top FTSEurofirst 300 gainer, up 4 percent after forecasting higher profits for 2014.

German blue-chip steelmaker ThyssenKrupp (Xetra: TKA.DE - news) also gained, up 1.1 percent, and basic resources stocks rose 1.2 percent, the top sectoral gainer in Europe.

But peer SSAB (Other OTC: SSAAF - news) fell 0.8 percent after reporting its sixth straight quarterly loss, with growth slowing in China.

"For Arcelor, the numbers were a bit a better for Q4, and the outlook isn't horrific, so the stock's having a nice pop. But equally, for SSAB, losses continue, and they're talking about slower demand from Asia," Nick Xanders, who heads up European equity strategy at BTIG, said.

"The move in ArcelorMittal looks a bit excessive, but people are relieved as it could have been a lot worse."

Danske Bank (Other OTC: DNSKF - news) was also among the top risers, building on a 3.7 percent gain after it released results on Thursday. The Danish bank rose 3.9 percent on Friday after Nomura and Deutsche Bank (Xetra: DBK.DE - news) both raised their target prices in light of the report.

The top faller was Skanska, down 3.8 percent, after the Nordic (SES: MR7.SI - news) region's biggest builder said that the outlook for its markets was slowly improving after it posted fourth-quarter order intake below expectations.

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