By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares ended a strong week on positive note on Friday, with automakers leading a broad market rally.
Up 4.7% for the week, the pan-European Dow Jones Stoxx 600 index closed the session with a rise of 1.6% to 196.96.
Advancers outnumbered decliners by roughly a 2-to-1 margin in London, Paris and Frankfurt.
This week's gains extended a share rally that started in March, although shares are still roughly 37% below where they traded 12 months ago.
"I think that we are now beginning to lose the fear of an economic collapse but we haven't yet got the confidence that an economic recovery is underway," said Andrew Bell, strategist at Rensburg Sheppards.
However, Bell said he's more optimistic than pessimistic for the medium term .
"Although there are lots of headwinds from consumers wanting to pay off debts and banks being reluctant lenders, there's also been an unprecedented amount of financial stimulus coming through and I think in the end it will work," he said.
According to data from Thomson Reuters, analysts expect companies in the Stoxx 600 to record a 12.5% profit drop this year, while the sell-side sees earnings growing 15.8% in 2010.
On a regional level, the U.K. FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.22% rose 1% to 4,092.80, the German DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.22% 1.5% to 4,676.84 and the French CAC-40 index advanced 1.8% to 3,091.96.
European shares shook off a lackluster start to the session after earnings from U.S. industrial bellwether General Electric /zigman2/quotes/208495069/composite GE -0.28% and banking giant Citigroup /zigman2/quotes/207741460/composite C +1.34% exceeded analyst expectations. Read more on General Electric.Read more on Citigroup.
The results from Citigroup followed better than expected earnings from Goldman Sachs and J.P. Morgan earlier in the week.
Banks advancing in Europe included UBS /zigman2/quotes/206172872/composite UBS +1.22% , up 7.3%, while industrials were also higher, with Siemens /zigman2/quotes/200873563/delayed DE:SIE +0.40% shares up 1.2%.
Automakers were the best performers. Ahead of next week's U.K. budget, in which incentives to scrap old cars are expected to be introduced, shares of Renault /zigman2/quotes/200919924/delayed FR:RNO -1.56% rose 10.2% and those of Fiat climbed 7.2%.
Fiat shares also got a boost on indications a deal with Chrysler appears likely.
Telecom equipment makers also saw gains, following on from Nokia's /zigman2/quotes/207421390/composite NOK +2.99% results on Thursday.
Nokia shares rose another 3.1%, with the firm getting an upgrade from J.P. Morgan, and Ericsson /zigman2/quotes/208932705/composite ERIC +0.54% /zigman2/quotes/207544813/delayed SE:ERIC.B +1.99% shares rose 4.1%.
Ericsson's mobile handset joint venture, Sony Ericsson Mobile Communications, reported a first-quarter pretax loss that broadly met forecasts while announcing 2,000 job cuts. Read more on Sony Ericsson results.
Still, hotels group Accor /zigman2/quotes/203800565/delayed FR:AC +1.09% and supermarket giant Carrefour /zigman2/quotes/208564127/delayed FR:CA -0.17% traded lower in Paris after both firms detailed a drop in first-quarter revenue.
Accor shares fell 4.7% and Carrefour shares declined 2.1%. See Carrefour story.
Beiersdorf /zigman2/quotes/210479173/delayed DE:BEI -0.19% dropped 8.6% as the maker of Nivea skin cream said first-quarter comparable sales dropped 4% and that its operating margin fell to 10.1% from 12.9%.