Europe close: Gains in banks lifts indices

European stocks rose on Friday, supported by encouraging Chinese inflation figures which helped to ease concerns over the world’s third-largest economy and on the back of better than expected results from US banking heavyweights Citigroup and JP Morgan Chase .

The benchmark Stoxx Europe 600 index was up 1.29%, Germany’s DAX gained 1.6% and France’s CAC 40 was up by 1.49%, with the Stoxx gauge of lenders' shares gaining 2.16%.

Meanwhile, crude oil futures reversed earlier gains. West Texas Intermediate finished down 0.74% to $50.07 a barrel and Brent crude was 0.7% lower at $51.68.

IG’s Joshua Mahony said: “European markets are once more taking their lead from overnight data out of China, with the world’s second largest economy finally breaking out of its deflationary spiral. If yesterday’s deterioration in Chinese exports pointed towards the potential for further easing from the PBoC, today’ surprise spike in both consumer and producer prices does the opposite, proving that the inflation picture is on the right track.”

China’s headline consumer price index advanced at a 1.9% year-on-year clip in September, after a rise of 1.3% in August, as food price gains accelerated to 3.2% year-on-year from 1.3%.

Non-food price increases also quickened to a 1.6% pace - a two-year high - up from 1.4% the month before. Economists had forecast a gain of 1.6% in headline CPI.

Producer prices rose 0.1% year-on-year after declining by 0.8% in August, with a rise in industrial commodity prices responsible for the move.

Basic resources reversed some of the previous session’s losses on the back of the data, with the Stoxx 600 sub-index for the sector up 0.64% by the closing bell.

In corporate news, hedge fund manager Man Group surged after reporting a jump in third-quarter funds under management and announcing an agreement to acquire real asset manager Aalto Invest Holding AG.

France's SFR gained ground as Altice said it had bought a 5.21% stake in the company, lifting its overall holding to above 82%.

On the downside, Software AG tumbled after posting a big drop in third-quarter earnings.

Infosys was also in the red after reporting a 6.1% rise in second-quarter net profit but downgrading its outlook for the year.

JPMorgan posted a 7.6% drop in quarterly profit, with net income down to $6.3bn in the third quarter from $6.8bn in the same period last year and earnings per share of $1.58 versus $1.68. Analysts had been expecting EPS of $1.38.

Citigroup reported a drop in third-quarter earnings and revenue on Friday, but the figures were ahead of analysts’ forecasts.

Third-quarter net income came in at $3.8bn, or $1.24 per diluted share, down from $4.3bn, or $1.35 in the third quarter of 2015, on revenue of $17.8bn, down from $18.7bn. Analysts had been expecting adjusted EPS of $1.16 and revenue of $17.3bn.