By Julien Ponthus and Josephine Mason
LONDON (Reuters) - European shares rose to five-month highs on Friday, starting the month on a strong footing, as a fresh batch of corporate updates fuelled risk appetite, even after U.S. President Donald Trump raised some concerns over trade talks with China.
The pan-regional STOXX 600 index closed up 0.4 percent after hitting its highest since Oct. 8 earlier in the session.
"Momentum has flagged slightly in recent sessions and concrete news of an agreement between the U.S. and China is now needed to prolong the rally in risk assets," wrote Peel Hunt analyst Ian Williams. In the meantime it was up to corporate earnings to maintain morale, he added.
Gains spread across all regional bourses with Germany's exporter-heavy DAX leading the charge thanks notably to rising car makers stocks.
"If corporate profits do grow, which I think they will, equities look reasonably good value," said Edward Rumble, European equity portfolio manager at RWC Partners.
The Dublin bourse was up 1.3 percent, outperforming its European peers as worries that Britain will crash out of the European Union without a deal at the end of this month eased. The market is often seen as a barometer for Brexit sentiment.
The optimism on markets came despite mixed news from economic indicators.
Data showed euro-zone manufacturing activity went into reverse for the first time in more than five years, but German retail sales jumped and the bloc's powerhouse unemployment remained at record lows.
Still, the market pared some of its earlier gains in the afternoon after data showed February U.S. manufacturing activity dropped to its lowest since November 2016.
"Fridays have been good days for markets of late, and investors are hoping that the same trick will be repeated today, with some 'first day of the month' inflows helping as well," said Chris Beauchamp, chief market analyst at IG.
"However, optimism has been dampened by a poor run of U.S. data, with the ISM manufacturing PMI and personal spending both weaker, plus a downward revision to consumer confidence."
Among individual moves, Italian luxury group Moncler stole the spotlight, rising 11.1 percent for its best day since January 2014 after its 2018 results, which broker Jefferies called "remarkable".
Moncler peer benefited from the rally with Gucci owner Kering up 3.2 percent, LVMH up 1.5 percent and Burberry rose 3.1 percent.
Britain's WPP, the world's biggest advertising company, rose 4.9 percent after its full-year results came as a relief amid fears the industry is facing structural headwinds.
Investors have been cautious about the company since French rival Publicis earlier this month results alarmed the market.
Rheinmetall was the second-best performer on the STOXX 600, rising 9.9 percent after its profits surge.
Among financials, Jupiter Fund Management was another big gainer, up 7.1 percent after its dividend beat estimates.
"The company paid out 90 percent of underlying earnings, driving the beat," write KBW analysts.
It was a different story for hedge fund manager Man Group which lost 2.6 percent after reporting funds under management fell last year.
RELX sank 6.9 percent to the bottom of the FTSE 100, for its worst daily performance in almost a decade, after the University of California canceled its contract with the company's Elsevier publishing arm.
Liberum analysts said the deal loss won't have a material impact on earnings in the short term.
But it will reignite concerns about the concept of "open access", which the university says should mean research should be freely available to the public and not behind a paywall.
(Reporting by Julien Ponthus and Josephine Mason, additional reporting by Helen Reid; Editing by Helen Reid and Josephine Mason)