European shares post biggest weekly gain in 12 weeks
The pan-European STOXX 600 index rose 0.2 percent on the day, taking its weekly gains to 2.2 percent.
The euro zone banking index rose 1.9 percent on Friday, making it the top performing sector year-to-date with a 56.8 percent gain.
Banking stocks have benefited from investors seeking shelter in domestically-focused equities due to uncertainty surrounding US tariff policies, while analysts have also highlighted strong performance during the earnings season.
'Financials are once more the key differentiator, with strong results across the board, accounting for three quarters of the upside surprise,' strategists at BofA Global Research said.
'Given financials' outsized share in index earnings, better-than-expected quarterly earnings for the sector has helped to lift consensus estimates for the market overall by 5 percent since mid-July.'
Globally, investors monitored geopolitical developments after Bloomberg News reported that the United States and Russia are aiming to reach a deal to halt the war in Ukraine that would lock in Moscow's occupation of territory seized during its invasion.
Defence stocks fell 0.8 percent on the day, leaving annual gains at 51.4 percent, just below the banking sector.
Shares of German reinsurer Munich Re fell 7.2 percent and ranked among the top decliners on the benchmark index after it trimmed its fiscal-year outlook for insurance revenue.
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