European shares concluded Friday's trading session at record highs, with the STOXX 600 index climbing 1.00% as investors demonstrated resilience despite recent earnings disappointments and geopolitical tensions. The benchmark index achieved its longest weekly winning streak since May, recovering from two consecutive losing sessions.

Mining Sector Drives Market Rally

The day's standout performer was Glencore, which surged 10.00% following confirmation of early merger discussions with Rio Tinto. The potential deal would create the world's largest mining company, generating significant investor interest in the commodities sector.

Anglo American shares rose 2.70% after European Commission filings indicated the company's deal with Canada's Teck Resources is progressing toward antitrust clearance in Europe.

Technology Stocks Lead Weekly Gains

Technology stocks delivered their strongest weekly performance in nearly two years, benefiting from positive fourth-quarter results from TSMC, the world's largest contract chipmaker. The semiconductor sector saw broad-based gains across European markets.

Dutch chip equipment maker ASML emerged as the biggest gainer in the technology index after HSBC raised its price target on the stock, while German semiconductor manufacturer Infineon and STMicroelectronics also posted solid advances.

Defence and Retail Sectors Show Contrasting Trends

Defence stocks achieved their best weekly showing since November 2020, gaining nearly 10.00% following calls from U.S. President Donald Trump for increased defence spending. This sector performance highlighted investor appetite for companies positioned to benefit from higher military expenditure.

Conversely, retail stocks continued their decline from the previous session. Pandora shares fell 13.00% after the jewellery maker warned of weaker sales growth prospects for 2025. Sainsbury's dropped 5.30% following reports of declining general merchandise and clothing sales during the Christmas quarter.

Market Outlook and Economic Indicators

Global market sentiment received support from the latest U.S. non-farm payrolls report, which showed cooling job growth alongside a decrease in unemployment rates. According to James Knightley, chief international economist at ING, "The bulk of the U.S. economy is trimming employment, which points to further work for the Federal Reserve. Nonetheless, the dip in unemployment and a likely 'hot' inflation print next week suggests no action before March."

The employment data reinforced expectations that the Federal Reserve will maintain current interest rates at its January meeting, providing stability for risk asset appetite. On the trade front, European Union member states confirmed broad majority support for a planned free trade agreement with South American bloc Mercosur, potentially opening new market opportunities for European companies.

European shares opened higher on Friday, driven by strong performance in mining and energy sectors, with the STOXX 600 index gaining 0.4% by 0809 GMT. The rally put the benchmark index on track for its longest weekly winning streak since May, reversing two sessions of losses attributed to weaker earnings and geopolitical tensions.

Mining Sector Leads Rally

Glencore emerged as the standout performer, surging 8% to touch its highest level since July 2024. The dramatic rise followed Rio Tinto's announcement on Thursday that it is in early talks to acquire Glencore, a potential deal that would create the world's largest mining company.

Anglo American also contributed to the sector's strength, rising 2.4% following a European Commission filing indicating that the miner's deal with Canada's Teck Resources is heading for antitrust clearance in Europe.

Sector Performance Breakdown

Energy stocks and miners led the market advances, demonstrating strong investor appetite for commodity-related investments.

Technology Stocks Gain Momentum

The technology sector also showed positive momentum, with Dutch chip equipment maker ASML adding 2.1% after Taiwan Semiconductor Manufacturing Company (TSMC) reported better-than-expected fourth-quarter revenue. Chipmaker STMicroelectronics contributed to the sector's gains, rising nearly 1%.

Market Outlook

Investors are awaiting a crucial U.S. jobs report scheduled for Friday, which is expected to show a slowdown in job growth for December. The anticipated deceleration is attributed to increased caution among businesses, potentially influencing broader market sentiment and monetary policy expectations.

The current rally represents a notable recovery from recent weakness, with European markets demonstrating resilience despite ongoing geopolitical uncertainties and mixed corporate earnings results.