LONDON (AP)- European stocks edged upwards Friday led by automobile and oil stocks as Goldman Sachs, Morgan Stanley and ABN Amro reiterated their positive stance on equities.
"We continue to believe that an overweight equity position is justified...we are reassured by companies' solid balance sheets, central banks' willingness to prevent a credit crunch, the robustness of the global economy outside the U.S., and the solid profit outlook and the reasonableness of valuations,'' said equity strategists at investment bank ABN Amro.
The Dutch bank's stance was echoed by Morgan Stanley, which expects the Federal Reserve's decision to cut its key interest rate by 50bps, together with the better than expected third-quarder results, from investment banks to boost share prices.
Meanwhile, Goldman Sachs highlighted strong global growth, reasonable valuation and strong balance sheets for its belief that equities will outperform other asset classes.
The pan-European Dow Jones Stoxx 600 index rose 0.5 percent to close at 376.8.
The U.K.'s FTSE 100 Index added 0.4 percent to close at 6456.7, while France's CAC-40 Index gained 0.2 percent at 5700.7.
Germany's DAX Index gained 0.8 percent, closing at 7794.4.
The automobile sector led the outperformers with the DJ Stoxx Automobile subsector rising 2.5 percent to close at 379.97 following Goldman Sach's decision to upgrade European automobiles to attractive from neutral.
It said the market seemed to be ignoring ongoing transformational restructuring benefits or assuming a substantial slowing in global growth.
Italy's Fiat and France's Renault, the broker's conviction buys, rose 4.7 percent and 4.2 percent to close at euro20.15 (US$28.31) and euro140.73 (US$197.71) respectively.
Oil stocks also outperformed after Brent crude oil futures in London rose to a new record high Friday of $79.43 a barrel and Eni issued interim results confirming figures released in July.
BP closed 0.3 percent higher at 592 pence while Eni ended 0.4 percent up at euro36.76 (US$51.64).
The mining sector was also in focus with BHP Billiton closing 1.5 percent higher at 1656 pence as spot gold prices hit a fresh 27-year high of $739.60 an ounce with gold continuing to rally in the wake of Tuesday's 50-bp Federal Reserve rate cut due to a softening dollar and worries about future inflation, and the December futures hit a fresh 16-month high of $747.10 in overnight electronic trading.
Despite financial stocks ending the week lower overall, the U.K's Northern Rock bucked the trend closing 4.9 percent higher at 194.30 pence following RAB Capital's decision to raise its stake in the mortgage bank to 6 percent Thursday and speculation surrounding potential predators.