Europe close: Stocks advance with sentiment buoyed by China data

European shares held gains on Friday, driven by better-than-expected data from China.

The pan-European Stoxx 600 index was up 0.23% to reach 461.93 after a strong finish on Thursday when the European Central Bank hiked interest rates again, but signalled that it may pause rises for the time being. All major regional bourses were higher.

Germany's Dax also ended higher, adding 0.56% to 15,893.53, while France's Cac-40 put on 0.96% to end at 7,378.82.

A raft of data from China out on Friday showed signs that the world's second largest economy may be stabilising after months of weaker-than-expected economic indicators.

Both retail sales and industrial output smashed expectations in August, though economists were quick to point out that this is unlikely the start of a significant recovery as Beijing still grapples with a property crisis that some fear could spill over into the wider financial sector.

The People's Bank of China made another cut to the reserve requirement ratio – the amount of cash that banks need to have on hand – as it continues to attempt to prop up the real estate market.

Market sentiment was also lifted by the stockmarket debut of computer chip maker ARM, whose shares surged 25% during the previous session.

"The huge enthusiasm around trading suggests there is still very much still appetite for high-growth names, and there’s growing hope that the IPO market will now become more buoyant next year," said Hargreaves Lansdown analyst Sophie Lund-Yates.

"IPO activity is a strong indicator of overall sentiment – people rarely come to market when things are highly uncertain. The timing of the IPO is a clear signal that owner Softbank, which still owns 90% of ARM, wanted to capitalise on the artificial intelligence wave."

On the commodities front, Brent crude oil traded above $94.27 a barrel, adding 0.34% on the day and approaching the psychological $100 level.

Games Workshop jumped 11% as the Warhammer maker said results for its most recent quarter had come in above expectations.