UPDATE 2-Luxury stocks drive fifth day of gains in Europe

(For a live blog on European stocks, type LIVE/ in an Eikon news window)

* AB InBev shares slump as it cuts growth outlook

* Kering , Gucci top STOXX 600 gainers

* Barclays up on Q3 beat (Updates to market close)

By Sruthi Shankar

Oct 25 (Reuters) - A late turnaround helped European stocks notch gains for a fifth straight session on Friday, as signs of progress in U.S-China trade talks and upbeat reports from luxury goods makers dispelled some fears about an earnings and growth slowdown.

After starting the day nearly flat and eventually falling as much as 0.4%, the main European equities benchmark .STOXX recovered to finish 0.2% higher.

New York's S&P 500 .SPX surpassed its record closing high after CNBC reported that the United States and China were close to finalising parts of a trade pact, while the trade-sensitive German DAX .GDAXI rose 0.2%. CAC 40 .FCHI outperformed major regional indexes as Gucci owner Kering PRTP.PA jumped 8.7%, while Italian jacket maker Moncler MONC.MI rose 11.3%. The companies joined other luxury labels in easing fears of a major third quarter sales hit from protests in Hong Kong. retail index .SXRP gained 1.2%, leading gains among major subsectors.

The food and beverage sector .SX3P led losses on Friday, however, after brewer AB InBev ABI.BR provided a cautious outlook and reported weaker-than-expected quarterly earnings growth, sparked by reduced demand for its beer in Brazil and South Korea. in Carlsberg (CSE: CARLa ) CARLb.CO and Heineken HEIN.AS dropped about 2% each.

"Today's moves seem to have trimmed some of the progress we have seen on the week," said Ken Odeluga, an analyst with City Index in London.

"You have a mechanical effect from that 10% decline in AB InBev, but you can't really generalize. We may not see a stellar earnings season but with expectations so low there will be more beats for sure," Odeluga added.

MORE WRANGLING

The prospect of months more wrangling over Brexit remained as the EU failed to set a date for Britain's departure from the bloc, while the UK parliament squabbled over Prime Minister Boris Johnson's call for an election to break the deadlock. ambassadors agreed in principle to a delay beyond the Oct. 31 deadline, but will not decide the length of the extension until Monday or Tuesday, an official said.

London's FTSE 100 .FTSE fell for the first time in five sessions, while mid-caps .FTMC and the pound weakened as Johnson conceded for the first time on Thursday that he could not meet his Oct. 31 Brexit deadline. uncertainties around trade and Brexit, the STOXX 600 closed the week with a gain of more than 1% after a handful of industry heavyweights topped low market expectations.

The Swiss index .SSMI , packed with defensive shares that have been favoured this year, hit a record high.

Shares in French tyre maker Michelin MICP.PA gained 6% after it maintained its full-year profit guidance even as it cut its forecast again for the global tyre market. telecoms operator 1&1 Drillisch DRIG.DE and its parent United Internet UTDI.DE tanked after the former's request to review prices under an agreement with rival Telefonica (MC: TEF ) Deutschland O2Dn.DE was rejected. those gains was a 16.2% fall in shares of entertainment company Ubisoft UBIP.PA , which lost roughly a quarter of its value after cutting its 2020 earnings guidance. banks, Britain's Barclays BARC.L rose 2.4% after reporting higher than expected third-quarter earnings. Anheuser and beer companies