Europe close: Stocks rise heading into the weekend

Stocks ended the week on an up note, as traders pared their bets for interest rates hikes by the US central bank at their next meeting.

Fed funds futures were left pricing in 31% odds of a 100 basis point hike by the Federal Reserve at on 26-27 July, down from 75% odds the day before, after the heads of the Atlanta and St.Louis Fed banks talked markets down, although one of their colleagues, Fed Governor Christopher Waller, had left the door open to a 100bp move the day before.

"Perversely of course, strong retail spending would show that perhaps the economy isn’t cooling in the way the Fed would like, and even if inflation drops back a bit in the coming months, a full on pause seems unlikely right now," said IG chief market analyst Chris Beauchamp.

"Investors should be prepared for a fresh drop in September perhaps, with the summer rally likely to be only a brief dalliance.”

Beauchamp was referring to the 1.0% month-on-month rise in US retail sales volumes reported earlier in the session.

By the end of trading, the German Dax had snapped 2.76% higher to 12,864.72, while the FTSE Mib was up by 1.95% to 20,954.86.

In parallel, euro/dollar was 0.59% higher at 1.0077, alongside a 1.87% advance in front-dated Brent crude oil futures to $100.97 a barrel.

Italian 10-year government bond yields however only recouped a little of the previous day's prices losses with yields down five basis points to 3.26% on Friday.

Further boosting the mood, overnight Italian President, Sergio Mattarella, had rejected his Prime Minister's, Mario Draghi's, resignation.

"These developments are fully in line with our baseline of Draghi remaining as PM, to which we attach a 50% probability," said analysts at JP Morgan.