EUROPE'S WEEK STRONGEST

REPORTS of progress in US-China trade negotiations drove a strong rally in European stocks on Friday, boosting mining, autos and banking shares as investors hoped for a resolution to the tariff war between the world's two biggest economies.

The trade-sensitive German index jumped as much as 2 percent while the STOXX 600 rallied 1.3 percent, accelerating gains that after a tepid open following weak China inflation data.

China's state news agency Xinhua reported China and the US reached a consensus in principle on some key issues during trade talks in Beijing during which they discussed topics including technology transfers and intellectual property protection.

Combined with Chinese President  Xi Jinpping saying talks will continue Washington nest week, that gave the market another leg up after US Treasury Secretary Mnuchin said talks had been  'productive'.

Mining stocks jumped  2 percent to a four-month high and Chinese-sensitive autos stocks rose 1.3 percent, a big reversal from early losses after weak European car sales data.

'Clients are underweight, upside is the path of least resistance,'' a senior sales trade said. The strong gains erased the market's pessimism after figures showed China's factory-gate inflation slowed for seventh straight month.

Despite the hit to to European markets after weak US retail sales data on Thursday, the  STOXX 600 was set for its strongest week since mid November.

''Year-to-date Europe has been doing surprisingly well in terms of market performance, but the data is still looking pretty bad,'' Martin Moeller, portfolio manager at UBP in Geneva, said.

Car shares had fallen earlier after weak European car sales data. Investors also looking to a Feb 17 deadline for the US Commerce Secretary to release a report about whether European car imports pose a national security threat. [Agencies].