LONDON, Oct 7 (Reuters) - European shares extended gains to hit a session high in afternoon trade on Thursday after data showed new U.S. claims for unemployment benefits unexpectedly fell last week, touching their lowest in nearly three months.
ECB President Jean-Claude Trichet's comments that last week's move by banks to slash their use of European Central Bank loans shows money markets are beginning to function more normally also helped the market.
At 1257 GMT, the FTSEurofirst 300 index of top European shares was up 0.5 percent at 1,076.27 points after rising to a high of 1,077.13 earlier in the session. (Reporting by Atul Prakash and Harro Ten Wolde)