LONDON—Better-than-expected U.S. jobs figures that included a surprise fall in the unemployment rate to its lowest level since January 2009 shored up markets Friday.

The U.S. government reported that the world's largest economy generated 114,000 jobs in September, roughly in line with markets' subdued expectations. However, upward revisions to previous months' figures and a fall in the unemployment rate—from to 7.8 percent from 8.1 percent—reassured investors, who marked stocks higher.

"While the headline number may be viewed as disappointing, there is much else to like in this report," said Dan Greenhaus, chief global strategist at BTIG.

In Europe, the FTSE 100 index of leading British shares was up 0.7 percent at 5,871 while Germany's DAX rose 1.2 percent to 7,397. The CAC-40 in France was 1.6 percent higher at 3,457.

In the U.S., the Dow Jones industrial average was up 0.5 percent at 13,565 while the broader S&P 500 index rose 0.25 percent to 1,465.

The dollar also lost some ground as investors grew more willing to buy supposedly-riskier assets—the euro was up 0.2 percent at $1.3049, near its highest level since Sept. 19.

The price of oil, however, remained lower despite the upbeat U.S. figures as investors booked gains made this week, when concerns rose of tensions between Turkey and Syria. The benchmark New York rate was $2.41 lower at $89.31 a barrel.

Europe's financial crisis provided relatively few distractions for markets this week, though Spain's reluctance to tap a new bond-buying facility from the European Central Bank is causing investors some concern. The yield on the country's 10-year bonds edged back towards the 6 percent mark on Thursday, but fell Friday in the more risk-on environment. By late afternoon, it was 0.20 percentage points lower at 5.66 percent.

On Thursday night, Spain's finance minister Luis de Guindos insisted that the country "doesn't need a bailout."

While the country may not want rescue loans for its government, it may still approach the eurozone's emergency funds, which would let the ECB to start buying Spanish bonds, keeping a lid on the country's near-term borrowing rates.

De Guindos conceded that Spain was at the epicenter of Europe's debt crisis, which is entering its fourth year. In October 2009, then newly-elected Greek Prime Minister George Papandreou revealed that Greece's public finances were in even worse shape than feared.

"I would even say that the future of the battle of the euro will be waged in Spain," De Guindos told an audience at the London School of Economics.

Earlier, Asian stocks advanced, with Japan's Nikkei 225 index closing up 0.4 percent at 8,863.30 after the Bank of Japan announced no change in the country's key interest rate following a two-day policy meeting.

South Korea's Kospi gained 0.1 percent to 1,995.17 and Hong Kong's Hang Seng added 0.5 percent to 21,012.38.

Markets in China are closed for a public holiday.