European markets extended gains for a third day on Friday, as China's move to boost bank lending outweighed data showing slower-than-expected US job growth and a fall in German industrial output.
In a strong week for European stocks after what investors saw as a positive turn of political events in Britain, Italy and Hong Kong as well as signals on resumption of US-China trade talks, the benchmark STOXX 600 index rose 1.7pc for the week, its third weekly gain in a row.
Shares in trade-sensitive chemical and industrial companies were the biggest percentage gainers on the STOXX index after China's central bank said it was cutting the amount of cash that banks must hold as reserves, boosting liquidity to shore up the slowing economy.
Hopes of stimulus for major economies, hurt by a bruising trade war between the United States and China, have encouraged investors to take risk despite lingering worries about a recession.
Mixed jobs data from the world's largest economy, which showed US hiring slowed more than expected in August although wage gains picked up, did little to change traders' bets on two more rate cuts from the Federal Reserve this year.
"European markets were trading higher before the jobs data came out and reacted just slightly lower to that," said Ken Odeluga, market analyst at City Index in London.
"The China news clearly had a positive effect on risk appetite, but it's quite in-line with well-telegraphed intent from Beijing to provide stimulus to stabilize growth."
Also feeding into the market are expectations that the European Central Bank will cut interest rates when it meets next week, and point to possible further moves to head off a broader downturn.
Fresh data on Friday showed an unexpected fall in German industrial output in July, adding to signs that manufacturers in Europe's biggest economy are struggling.
Germany's DAX, however, was the outperformer on Friday with a 0.5pc rise, helped by Thyssenkrupp AG's shares which jumped 5pc to a two-month high after a report Finland's Kone was considering teaming up with a private equity partner to bid for the conglomerate's elevator business.
Auto shares, despite cutting some gains on news of US probe against four automakers, notched their biggest weekly gain since early April.
Shares of BMW AG and Volkswagen AG closed nearly flat after reports the US Justice Department was investigating a decision of the automakers to reach a voluntary agreement with California to adopt state emissions standards violated antitrust law.
Norway's Telenor fell 3.4pc after it scrapped a plan to create a telecoms joint venture with Malaysia's Axiata Group .
Europe's energy index was at the bottom of the STOXX 600 as oil prices fell more than 1pc amid worries about US-China trade tensions.
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