European stocks open higher driven by financial sector gains

European stocks opened higher on Friday, supported by gains for financial stocks, although the main index was heading towards a weekly decline after investors reduced their expectations for an interest rate cut following comments from policymakers.

According to Reuters, by 0818 GMT, the European STOXX 600 index rose 0.4%, continuing the gains it achieved in the previous session.

Most major sector indices declined, with euro zone bank shares rising 0.6%, supported by a jump of about three percent in the KBC Group after Morgan Stanley (NYSE:MS) raised the rating of the Belgian integrated bancassurance group.

However, hawkish comments from European Central Bank policymakers prompted traders to scale back their interest rate cut bets, putting the benchmark on track for a weekly loss.

On the data front, German producer prices fell more than expected in December, falling 8.6 percent year-on-year, despite the DAX 40 index of leading stocks rising 0.4 percent.

Among the stocks that led the rise, Teleforming stock jumped 4.7% after Stifel Investment Company raised its rating on the telecommunications services company’s stock.