European shares extended their gains in Friday trading, following stronger-than-expected nonfarm payrolls data out of the U.S. which rode off the back of news that China and the U.S. will have further trade talks next week.
The pan-European Stoxx 600 index rallied 2.8 percent provisionally, with all sectors and major bourses in positive territory. The German Dax ended up by 3.3 percent. Britain's FTSE 100 ended Friday higher by 2.2 percent.
Basic resources stocks — with their heavy exposure to China — were the top gainers in Europe after China's commerce ministry said the U.S. and China would hold vice-ministerial level negotiations over trade in Beijing on Jan. 7-8. Auto stocks were also among the top gainers. This is a sector highly sensitive to trade dynamics.
Looking at individual stocks, shares in Bayer rose after a U.S. judge moved to limit evidence in a trial over allegations that Monsanto's glyphosate-based weed killer Roundup causes cancer. The German pharmaceuticals firm bought U.S. agriculture giant Monsanto last year for $63 billion. Shares of Bayer were up 6.4 percent.
On the other end, media group ProSiebenSat.1 Media SE slumped to the bottom of the Stoxx 600 after Morgan Stanley cut its price target for the stock to 11.20 euros, down from 15.60 euros. The firm's share price fell nearly 4 percent.
Sainsbury's also fell into the red after Jefferies, HSBC and Bernstein cut their price targets for the stock. Shares sank 1.5 percent.
US-China trade talks
Investors are monitoring trade developments between Washington and Beijing for any clues as to how their trade dispute will reach a resolution. The two countries are trying to reach a breakthrough to resolve their differences over a 90-day tariffs truce.
In the meantime, the latest nonfarm payroll numbers surprised traders, with an increase of 312,000 in December from 155,000 in November. The dollar rose on the back of the fresh data.
In corporate news, troubled Italian lender Banca Carige is exploring the use of a 320 million euro ($364.6 million) convertible bond to boost capital and avoid the use of taxpayers' money, Fabio Innocenzi, formerly the bank's chief executive, said Thursday in an interview with Class CNBC. Innocenzi was one of three temporary administrators appointed by the European Central Bank to take control of the lender earlier this week.
In terms of data, British house prices in December fell 0.7 percent from the previous month, the biggest monthly fall since July 2012, according to Nationwide.
IHS Markit's euro zone composite final PMI fell to 51.1 in December, down from 52.7 in the previous month. The euro zone December inflation rate, meanwhile, fell steeper than was expected, to 1.6 percent, down from November's 1.9 percent.
Elsewhere, traders are looking ahead to a joint discussion with Federal Reserve Chairman Jerome Powell and former Fed chiefs Janet Yellen and Ben Bernanke, due to take place at 10:15 a.m. ET. The U.S. central bank raised interest rates four times in 2018, however expectations for the Fed to pause rate rises — or even cut rates — have increased amid fears around slowing global economic growth.