(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)
* European banks eye best month in a year
* German manufacturing still a bright spot - PMI
* Euro zone activity slips into decline
* STOXX 600 still ends week 1.4% lower (Updates to close)
By Sruthi Shankar and Susan Mathew
Oct 23 (Reuters) - European stocks rose on Friday, boosted by positive earnings updates from Barclays and a surge in Airbus, but nagging worries about the economic impact of surging COVID-19 cases saw markets post their biggest weekly decline in a month.
Breaking a four-day losing streak, the pan-European STOXX 600 index .STOXX advanced 0.6%, with London's FTSE 100 .FTSE outperforming its European peers after Barclays BARC.L jumped 7% on strong results. .L
That lifted regional banks .SX7P , putting them on course for their best monthly performance in over a year. Other sectors considered more economically sensitive such as automakers .SXAP and oil & gas .SXEP also found favour. than expected results from Barclays triggered renewed interest in banking shares, most of which are trading on depressed levels so value investors will be particularly interested," said Russ Mould, investment director at AJ Bell.
Meanwhile, data on Friday showed euro zone economic activity fell this month, while the German manufacturing sector expanded at a faster rate in October. But the German services activity shrank, suggesting Europe's largest economy is operating at two speeds. forces are in play at the moment," said Emmanuel Cau, head of European equity strategy at Barclays. "Globally you've these two main sources of growth - U.S. and China - that are still recovering, so part of the European market will still benefit from the strength outside of Europe."
"But the domestic part of the market exposed to mobility and restrictions are impacted by the second wave."
Surging COVID-19 cases in the region have led to more curbs of late, with France looking set to widen a curfew to more than two thirds of its population. Minister Bruno Le Maire said GDP will likely contract in the fourth quarter, adding that curfew measures would cost around two billion euros ($2.36 billion). some optimism this week stemming from new fiscal stimulus in the UK, markets now look to the European Central Bank meeting next week when analysts expect the bank to signal policy support in December.
Globally, the mood was one of caution with less than two weeks to go before the U.S. presidential election. GLOB/MKTS
Planemaker Airbus AIR.PA jumped 5.6% after it told suppliers to be ready for an output hike once demand recovers from the coronavirus crisis. group Kering PRTP.PA fell 3.2% as its star Gucci brand underperformed rivals. engineering company ABB ABBN.S was among the biggest drags on the STOXX 600 after saying it expects its orders and revenue to remain under pressure for the rest of 2020.
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