European markets close week firmly higher on US-China trade relief

European stocks closed higher on Friday after a report of progress on U.S.-China trade talks raised hopes of a breakthrough in their long-running dispute.

The pan-European Stoxx 600 was up more than 1.7 percent following afternoon deals, hitting its highest level since December 5. All sectors and major bourses were trading in positive territory.

For the week Europe’s blue chip stocks gained more than 2.2 percent.

Stocks in the baskets of Autos and Basic Resources — with their heavy exposure to China — were among the top gainers.

It comes after the Wall Street Journal reported Thursday that U.S. Treasury Secretary Steven Mnuchin proposed lifting all or some of the tariffs on Chinese imports. The goal is to push forward trade talks and get China’s support for longer-term reform.

Meanwhile, U.S. stocks opened higher on Friday, with all major indexes in positive territory.

Europe’s banking index was also in positive territory Friday morning, following a flurry of rating upgrades. Both Commerzbank and Banco Sabadell were given “buy” stock recommendations shortly after the opening bell, pushing their shares up firmly.

Meanwhile, Telecom Italia dropped to the bottom of the European benchmark, after the company said it expects domestic earnings to fall compared to 2017. Shares of the Milan-listed stock tumbled on the news.

Elsewhere, Ryanair dropped around half a percent after announcing its second profit warning in three months. The company said lower-than-expected winter fares were impacting its full-year profit.

On the data front, the adjusted current account surplus of the 19 countries sharing the euro narrowed to 20 billion euros in November, down from 27 billion euros in October. According to ECB projections, the bloc’s trade surplus is expected to continue to narrow over the coming years.

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