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[MILAN] European shares rose on Friday, ending a week of losses on a positive note with Milan outperforming thanks to a rally in its battered baking stocks.
Equities got a boost late in the session from a stronger-than-expected jobs report in the United States.
The pan-European STOXX Europe 600 rose 1.6 per cent but still ended the week with a loss of 1.5 per cent due to persistent worries over the economic and political fall-out of Britain's vote on June 23 to leave the European Union.
"The concerns of the Brexit are reflected quite well in share prices so the question is how much pain (there) will be before a relief. It's probably still a little bit away," Gerhard Schwarz, head of equity strategy at Baader Bank in Munich, said.
"It will also depend on a rebound in banks as the systemic risk due to Brexit is certainly a concern and credit risks coming from Italy are weighing on the sector," he said.
Milan's blue chip index outperformed the region to gain 4.1 per cent with banks Intesa Sanpaolo Banco Popolare and UniCredit posting gains of between 8.7 and 18.4 per cent.
Capital weakness and a mountain of bad loans have put Italian banks at the centre of investors' immediate concerns following the shock UK vote. But traders on Friday said there was some optimism that a solution to help Italian banks cut their soured loans could be reached.
"We have to monitor the situation very closely but if and when we'll get a solution, it will be a very interesting opportunity for financials but also European equities in general," Saxo Bank head of equity strategy Peter Garny said.
The European banking index, the worst sectoral performer since Brexit and so far this year, rose 3.8 per cent.
The auto index rose 3.9 per cent, making it the biggest sectoral gainer after data showed passenger vehicle sales in China rose 19.4 per cent in June.
Germany's auto-heavy DAX index rose 2.2 per cent with BMW, Daimler and Volkswagen gaining 3.6 to 4.3 per cent.
Shares in Danish telecoms group TDC jumped more than 9 per cent after it said it had rejected a potential takeover approach believed to be from private equity firm Apollo Global Management.