By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets headed for weekly advances on Friday as dovish comments from Federal Reserve Chairwoman Janet Yellen earlier in the week continued to push indexes closer to multiyear highs.

The Stoxx Europe 600 index rose 0.1% to 348.42, eyeing a 0.4% gain for the week.

Buoying the benchmark, shares of Shire PLC rallied 13% after the U.K. drug maker rebuffed a 27.2-billion-pound ($46.35 billion) takeover bid from U.S. rival AbbVieInc. (ABBV), citing undervaluation of the company. AbbVie said discussions were no longer ongoing and that there could be no certainty that any firm offer would be made.

Alstom SA picked up 1.3% after Siemens AG (SIEGY) and Mitsubishi Heavy Industries Ltd. sweetened their offer for Alstom's energy business. General Electric Co. (GE) on Thursday improved its bid for the Alstom unit, offering new assurances of French control.

The broader positive sentiment was seen as a continuation of an upbeat trading mood started earlier in the week, when U.S. Fed chief Janet Yellen said there would be "considerable time" between when the bond taper ends and when rate hikes begin.

The "trend is your friend and with the Fed reiterating their dovish stance the follow through has propelled global equities to new highs," said Mike McCudden, head of derivatives at stockbroker Interactive Investor, in a note.

However, the ongoing tensions in Iraq and rising oil prices were still lingering in the background, McCudden said, "and markets will soon start to price this in."

Islamists rebels on Thursday took control of Iraq's largest oil refinery, according to workers at the refinery, although an Iraqi army spokesman said the Iraqi military was in control of the refinery.

Additionally, U.S. President Barack Obama Thursday ordered up to 300 military advisers to Iraq.

Back in Europe, the U.K.'s FTSE 100 index gained 0.2% to 6,821.18, partly lifted by the rally in Shire shares. Germany's DAX 30 index climbed 0.2% to 10,019.45, while France's CAC 40 index slipped 0.1% to 4,559.33.

Outside the main index in London, shares of TSB Banking Group PLC soared 14% on its debut trading day. The IPO was priced at GBP2.60 a share, but the strong demand sent the company trading around GBP2.95.

The move took Lloyds Banking Group PLC (LYG) one step closer to selling off the whole TSB unit as part of a condition of its government bailout. The lender must divest its remaining shares in TSB by the end of next year.

Lloyds listed 175 million shares in TSB, or 35% of the business, raising GBP455 million and selling a bigger stake than initially planned. Lloyds shares dropped 0.6%.

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