Europe open: Stocks at four-month high as manufacturing PMIs improve

European stocks advanced to a four-month high on Friday, extending gains after an impressive November, with market sentiment still helped by yesterday's big drops in US and eurozone inflation.

The Stoxx 600 was up 0.4% by 0937 CET, trading at levels not seen since 10 August, with broad-based gains across the continent. The index gained around 7% during the month of November alone.

"Here we are, saying thanks and goodbye to the excellent month of November for both bond and equity markets," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "The debate now is, will such a strong month of November spoil our Santa rally."

Helping risk appetite early on was economic data from China which showed that factory activity had picked up in November. The Caixin/S&P Global manufacturing purchasing managers' index rose to 50.7 in November from 49.5 in October. This was above the 50.0 level that separates contraction from expansion and marked the fastest expansion in three months.

Meanwhile, the HCOB manufacturing PMIs from Spain, France and Germany all remained in negative territory in November but showed signs of the downturn easing, with numbers unexpectedly picking up.

Manufacturing data from the US will be closely watched later in the session, along with a speech from Federal Reserve chair Jerome Powell. Meanwhile, European Central Bank president Christine Lagarde is due to speak at 1230 CET.

Comments from both central banks will be in focus after data on Thursday revealed that inflation had slowed more than expected in both regions, raising hopes that policymakers will move to cut interest rates sooner than initially predicted.

"The bigger question now is not whether more rates are coming, but how many rate cuts could we see as we head into 2024, and which central bank will be forced to blink first," said Michael Hewson, analyst at CMC Markets.

In company news, Sweden streaming company Viaplay saw shares drop 80% in Stockholm after announcing plans to raise SEK4bn (£300m) and restructure its debt totalling SEK14.6bn, saying it had to lay off more than 30% of staff. "This extensive package and operational measures are absolutely necessary to secure the survival of the company," said chair Simon Duffy.

Mining stocks were performing well in London, with Anglo American, Rio Tinto and Antofagasta among the top risers on the Stoxx 600 after improving economic data from China lifted the demand outlook.