European stocks closed higher on Friday, as investors reviewed weak economic indicators from across the region which built expectations for central bank rate cuts.

The pan-European Stoxx 600 index provisionally closed 1.18% higher, with all sectors except banks ending in positive territory. Health care and retail stocks led the gains, both up over 2%, while Europe's banking index slipped 2%.

In the U.K., the pound fell to a six-month low against the U.S. dollar following U.K. retail sales data. The country's Office for National Statistics said that retail sales volumes lost 0.7% month-on-month in October, well below economists' expectations of a 0.3% decline.

London's FTSE 100 jumped 1.4% in its best session since early August as investors assessed whether the data — along with weak business activity figures this week — could see the Bank of England cut interest rates more rapidly in the year ahead, despite a recent uptick in inflation.

While market participants broadly expect a BOE hold in December, a 75 basis point reduction in the key rate from the current 4.75% is now fully priced in before the end of 2025.

The euro meanwhile slid against the dollar after PMI data showed that euro zone business activity fell sharply in November. The euro was last seen trading at $1.0397, down 0.73% for the session.

Source : CNBC