By Danilo Masoni and Helen Reid
LONDON/MILAN (Reuters) - European shares surged to a fresh 21-month high on Friday, spurred by strong earnings updates, supportive economic data and easing political worries ahead of Sunday's run-off vote in the French presidential election.
Centrist Emmanuel Macron extended opinion poll gains over far-right and eurosceptic National Front leader Marine Le Pen, bolstering investors' optimism over European stocks as the risk of a major political upset appeared to recede.
The pan-European index STOXX 600 (.STOXX) gained 0.6 percent to finish 1.9 percent higher on the week, while France's CAC 40 (.FCHI) jumped 1.1 percent to a new 9-1/2-year high and Germany's DAX (.GDAXI) scaled a fresh record high.
Early losses were reversed when U.S. non-farm payrolls data impressed and boosted equities globally.
European shares have rallied over the past two weeks after Macron's win in the first round of the French vote sparked a rush into risky assets, moving investors' focus to a brightening economic outlook and solid earnings updates.
"If the polls are as accurate as in the first round, much of the uncertainty is lifted and we can now look at France and the French markets with a much lower risk premium, concentrating on the fundamentals," said Philippe Ithurbide, global head of research at Amundi.
Strong earnings updates from European companies dovetailed with the easing political worries to lift stocks.
Half of European companies have reported earnings so far, with 78 percent beating expectations and 21 percent missing them, pointing to overall growth of nearly 17 percent in the first quarter of this year, Thomson Reuters I/B/E/S data shows.
"We are close to the halfway mark for first quarter earnings with so far the best beats in seven years," UBS said in a note "A turn in European earnings has been one of the key catalysts we have highlighted for Europe to start to outperform."
Among outstanding movers, Pearson (PSON.L) surged 12.4 percent after the global education company said it would cut more costs and consider selling its U.S. school courseware business in the latest attempt to restructure.
British Airways owner IAG (ICAG.L) rose 5.5 percent after it posted record results and joined other carriers in giving a more upbeat assessment on pricing.
Spain's Banco Popular jumped 8.7 percent (POP.MC) after it said it would sell off assets to boost its depleted capital position, after posting a 137 million euro first-quarter loss.
Among the handful of fallers, Inmarsat (ISA.L) dropped 7.5 percent after Barclays and Berenberg downgraded the stock, extending falls from Thursday when it reported first-quarter results.
Telefonica Deutschland (O2Dn.DE) fell 7 percent after it reported a smaller than expected rise in core profit, however, as roaming changes partly offset increased data usage and benefits from the E-Plus acquisition.
European shares were supported by oil and basic resource stocks reversing earlier losses. The oil index (.SXEP) jumped 2.1 percent, as crude prices trimmed losses, and basic resources (.SXPP) gained 2.6 percent.
(Editing by Catherine Evans)