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European Stocks Close Up after Strong U.S. Data

European stocks finished the week in the green after stronger-than-expected U.S. durable goods orders and new home sales data on Friday pushed back fears of a spillover of the credit markets crisis to the wider economy.

U.S. stocks rose across the major averages after Wall Street welcomed stronger-than-expected new home sales data for July. All eyes are now turning to the Asian markets, which finished broadly lower on Thursday.

Among the major European indexes, London's FTSE-100closed higher ahead of a long weekend. Monday is a seasonal bank holiday in the U.K. The Paris CAC-40also pushed into the green, with the Frankfurt DAX being the only major index to close the day in the red.

Despite the bearish mood in the Frankfurt market, the DAX gained 1.7% on the week and trading was much calmer.

Shares in the financial sector, battered by persistent fears of banks' exposure to the subprime mortgages crisis in the U.S., fell further as investors continued to fret about the size of the damage in the sector.

In Germany, Commerzbank shares traded 1% lower and Deutsche Postbank fell by 0.17% while French BNP Paribas was 0.9% lower and Societe Generale fell 0.3%. U.K's Standard Chartered was the biggest loser; its shares fell 4.9% after Merrill Lynch took it off its preferred banks list.

But other sectors, such as mining, metals or retail posted gains across Europe, signalling a return to business as usual for some investors.

U.K miners Rio Tinto and BHP Billiton rose by 2.3% and 1.5% respectively, while Arcelor Mittal shares surged 6.25% in Paris.

In Germany, retailer Metro rose 2.25%, while France's Carrefour ended the day nearly 2.2% higher.

Next week, all eyes will be on European Central Bank President Jean-Claude Trichet's speech in Budapest on Monday, for clues on whether the ECB will go ahead with a planned rate hike at its September 6 meeting.