* FTSEurofirst 300 index closes up 1.2 percent
* Commodity stocks rally after U.S. jobs data
* ThyssenKrupp jumps on revamp plan
* For up-to-the minute market news, click on
By Joanne Frearson
LONDON, May 6 (Reuters) - European shares rallied on Friday after better-than-expected April U.S. nonfarm payroll data improved investor confidence about the recovery and fund managers tipped equities for further progress.
The pan-European FTSEurofirst 300 index of top shares closed up 1.2 percent at 1,144.91 points following sharp falls in the previous sessions on growth worries and, in a positive signal for equities, moved above its 50-day average.
Volume was 116.7 percent of its 90-day average.
However, the index closed down 1 percent for the week as the previous session falls weighed.
Investor confidence improved after U.S. private employers in April added jobs at the fastest pace in five years, supporting the view the economic recovery would regain speed this quarter.
"We have a choppy few days and there is a bit of relief that we got some better-than-expected numbers," said David Moss, director of European equities at F&C Asset Management, which has $11.5 billion of assets under management in Europe.
"We are positive from here. We do not think there is going to be massive upside to year end, but equities will continue to make progress, and it is still a good market to buy."
Commodity stocks were in demand, recovering from initial falls, with base metal prices turning positive and Brent crude rising after dropping as much as 5.1 percent on growth worries.
The STOXX Europe 600 Basic Resources index gained 2.8 percent, with Anglo American, Vedanta Resources and Xstrata rising 2.3 to 3.8 percent, while the STOXX Europe 600 Oil & Gas index rose 1.8 percent.
VOLATILITY INDEX FALLS
The Euro STOXX 50 volatility index, Europe's main investor fear gauge, fell 11.4 percent, which suggested investor demand for riskier assets was improving; the lower the index, the higher the appetite for risk.
The positive sentiment after the data pushed other markets across Europe higher; the FTSE 100 index was up 1 percent, Germany's DAX gained 1.6 percent, and France's CAC 40 rose 1.3 percent.
Traders said some of the gains were spurred by those covering short positions they had taken in anticipation of weak U.S. jobs numbers.
"A lot of people had priced in a bad number, and as we go into the weekend we expect equity markets to rally as investors unwind short positions," said Matt Brown, trader at Catalyst Markets.
ThyssenKrupp jumped 8 percent on a revamp plan that could spur consolidation in the stainless steel sector. In earnings news, Royal Bank of Scotland gained 5.6 percent after the bank said it was "pulling off the recovery" that it targeted, and hefty Irish loan losses would start to decline in the second half of the year.
German airline Deutsche Lufthansa shares rose 4.1 percent after UBS upgraded its recommendation on the stock to "buy" from "neutral". (Reporting by Joanne Frearson; Editing by Will Waterman)