Iceland's Eyjafjoell volcano threatened European skies with a new ash cloud Friday raising the risk of more flight cancellations, officials said.

"Renewed and more intensive ash eruptions took place overnight and as a result, the area of potential higher ash contamination is forecast to extend from Iceland as far south as the western edge of the Iberian Peninsula during the day," Eurocontrol, the European intergovernmental air traffic control coordinator, said.

"Lava has stopped running from the crater and the eruption is now again an explosive eruption," Icelandic geologist Bjoern Oddson said.

"When there's more explosive activity, the ash does become finer and if the activity increases, it could possibly cause problems in Europe's airspace," he said, noting "the ash is spreading to the south-east" of Iceland.

Late Thursday, Icelandic meteorologists and geophysicists warned Eyjafjoell would emit a larger ash cloud after renewed activity, though Oddson said it had stabilised overnight.

"Right now, we're not seeing nearly as much ash fall as in the first few days of the eruption", which paralysed European flight traffic for a week from April 14, he said.

The ash, at sufficient concentrations, poses a hazard for plane engines.

According to the Brussels-based Eurocontrol, the areas where the volcanic ash concentration were likely to exceed engine tolerance levels were to the west of north-west Europe.

"Transatlantic flights are being re-routed south of the affected area which could cause delays to these flights."

The ash cloud was predicted to reach up to 35,000 feet (some 10,500 metres), far higher than in recent days and thus affecting more overflying planes.

The cloud caused Ireland to shut its airspace from 2300 GMT on Thursday to 1200 GMT Friday, the third closure in as many days.

The Faroe Islands, a Danish territory in the North Atlantic, also shut airspace from Thursday night until at least 0000 GMT Saturday.

The Portuguese air traffic agency NAV said ash was expected in the country's airspace north of Lisbon later Friday but would have a limited effect, causing only some rerouting.

Last month the Icelandic volcanic caused travel chaos, with airspaces closed over several European nations.

It was the biggest aerial shutdown in Europe since World War II, with more than 100,000 flights cancelled and eight million passengers affected. The airline industry said it lost some 2.5 billion euros.