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* European banks eye best month in a year
* German manufacturing still a bright spot - PMI
* Euro zone activity slips into decline
* STOXX 600 still ends week 1.4% lower
(Updates to close)
By Sruthi Shankar and Susan Mathew
Oct 23 (Reuters) - European stocks rose on Friday, boosted
by positive earnings updates from Barclays and a surge in
Airbus, but nagging worries about the economic impact of surging
COVID-19 cases saw markets post their biggest weekly decline in
Breaking a four-day losing streak, the pan-European STOXX
600 index advanced 0.6%, with London's FTSE 100
outperforming its European peers after Barclays jumped
7% on strong results.
That lifted regional banks, putting them on course
for their best monthly performance in over a year. Other sectors
considered more economically sensitive such as automakers
and oil & gas also found favour.
"Better than expected results from Barclays triggered
renewed interest in banking shares, most of which are trading on
depressed levels so value investors will be particularly
interested," said Russ Mould, investment director at AJ Bell.
Meanwhile, data on Friday showed euro zone economic activity
fell this month, while the German manufacturing sector expanded
at a faster rate in October. But the German services activity
shrank, suggesting Europe's largest economy is operating at two
"Opposite forces are in play at the moment," said Emmanuel
Cau, head of European equity strategy at Barclays. "Globally
you've these two main sources of growth - U.S. and China - that
are still recovering, so part of the European market will still
benefit from the strength outside of Europe."
"But the domestic part of the market exposed to mobility and
restrictions are impacted by the second wave."
Surging COVID-19 cases in the region have led to more curbs
of late, with France looking set to widen a curfew to more than
two thirds of its population.
Finance Minister Bruno Le Maire said GDP will likely
contract in the fourth quarter, adding that curfew measures
would cost around two billion euros ($2.36 billion).
With some optimism this week stemming from new fiscal
stimulus in the UK, markets now look to the European Central
Bank meeting next week when analysts expect the bank to signal
policy support in December.
Globally, the mood was one of caution with less than two
weeks to go before the U.S. presidential election.
Planemaker Airbus jumped 5.6% after it told
suppliers to be ready for an output hike once demand recovers
from the coronavirus crisis.
Luxury group Kering fell 3.2% as its star Gucci
brand underperformed rivals.
Swiss engineering company ABB was among the biggest
drags on the STOXX 600 after saying it expects its orders and
revenue to remain under pressure for the rest of 2020.
(Reporting by Sruthi Shankar in Bengaluru;
Editing by Sriraj Kalluvila and Andrew Cawthorne)