Europe open: Markets continue to rally ahead of US payrolls data

European stocks were rising for their fifth straight day on Friday as optimism continues to rise that central banks may be done with monetary tightening.

The Stoxx 600 was up 0.3% early on, with most major markets across Europe rising 0.2% to 0.5%. The index is now up 2.7% on the week, after touching a ten-month low last Friday, and is on track for its best weekly performance since March.

"That the Federal Reserve held rates this week was no surprise, but the accompanying comments from chair [Jerome] Powell lit the fire under stocks, with a noticeable fall in Treasury yields providing further fuel," said Richard Hunter, head of markets at Interactive Investor. "While leaving the door slightly ajar to further rate rises should inflation unexpectedly tick higher once more, sentiment has switched to the belief that the hiking cycle is now over."

The Bank of England followed suit and held rates steady on Thursday, with policymakers voting 6-3 in favour of keeping the Bank Rate at 5.25%, raising expectations that the central bank is also done with rate hikes for now. Meanwhile, last week's slowdown in Eurozone inflation also added to hopes that the European Central Bank may act sooner than predicted in cutting interest rates next year.

Markets worldwide are now waiting on the much-anticipated jobs report from the US, due out at 1230 GMT, for confirmation that tightness in the American labour market is starting to soften – which policymakers hope will ease some inflationary pressures. Non-farm payrolls are expected to come in at 180,000 in October, after a whopping 336,000 in September.

"A reading which conforms to consensus will provide further relief both to the Fed and to investors, while a hot reading would complicate the entire narrative once more, likely leading to higher yields and reigniting interest rate hiking concerns," Hunter said.

In company news, consumer electronics retailer Currys rallied in London after agreeing to sell its entire Greek and Cypriot division for €200m (£175m), as it looks to simplify its business model and pay down its pension deficit. The move will allow it refocus on core operations in the UK and Ireland, and Nordics regions, the company said.

Also in London, Smith & Nephew was also rising after an upgrade to ‘overweight’ at JPMorgan, while Anglo American traded up after an upgrade to ‘outperform’ at Oddo.

Milan's FTSE MIB was outperforming other indices across Europe, with strong gains from financial stocks like Banca Monte Dei Paschi di Siena, Intesa Sanpaolo and Finecobank, and auto stocks Ferrari, Stellantis and Pirelli. On Thursday, Ferrari lifted its full-year sales guidance after a strong third quarter.