JPM JP Morgan Chase and Co

By Riva Gold 

European stocks and U.S. futures advanced Friday amid hopes the start of banks' earnings season could help rekindle a postelection rally.

The Stoxx Europe 600 rose 0.6% in afternoon trading, while London's FTSE 100 index added 0.4%, on track for a record 14th straight session of gains.

Futures pointed to a 0.1% opening gain for the S&P 500, whiled investors anticipated a report on U.S. retail sales and focused on fourth-quarter earnings from major banks.

Shares of J.P. Morgan Chase & Co. rose 0.6% in premarket trading after the largest U.S. bank by assets posted stronger than expected fourth-quarter results. For the year, it earned $24.7 billion, an all-time record.

Shares of Bank of America Corp. were choppy and last down 0.2% after it reported its biggest annual profit in a decade but revenue for the latest quarter came in below expectations.

Shares of U.S. lenders have jumped since the November election on expectations for higher U.S. interest rates and a rollback of regulation, helping send major bourses to record highs. U.S. stocks fell Thursday, however, as financial shares declined ahead of the earnings reports.

"You've had quite a rally -- you do need to see positive surprises come through to drive that a lot further," said Simon Webber, a global equities manager at Schroders. "I'll be looking for evidence of improvement in net interest margins from the rate increase we've seen," Mr. Webber said.

The Federal Reserve raised interest rates in December for the first time in a year. Higher interest rates tend to boost lenders' profitability, as the rates they charge on many loans are directly tied to the Fed's target rate.

Some investors are hoping upbeat news from U.S. banks can help rekindle a postelection rally driven by hopes the new administration will help accelerate a rise in growth and inflation.

After a steep climb, U.S. stocks have largely moved sideways for the past month, keeping the Dow Jones Industrial Average just shy of the 20000 milestone. Major global stock indexes are on track to end the week slightly lower, while gold has gained over 2% and the dollar has weakened, as popular postelection trades have moved into reverse.

"I think the market had been giving President-elect Trump a lot of the benefit of the doubt that his pro-business ideas or plans are going to be ultimately enacted but that antibusiness things such as border walls and trade wars will probably not happen," said Randy Frederick, vice president of trading and derivatives at Schwab.

Between now and the inauguration on Jan. 20, however, "the market is in a wait-and-see mode," he said, with investors waiting for clarity on the new president's top agenda items and the timing of expected policy changes.

Elsewhere in markets, gains in Europe were led by banks and health care companies, which had been among the worst performers for most of the week.

French prosecutors said they opened a probe against Renault on suspicion of emissions fraud, sending shares of the French car company down 1.5%. Renault has previously denied using any so-called defeat devices to cheat on emissions tests.

Shares of Fiat Chrysler Automobiles gained over 4%, however, after suffering a steep fall Thursday when regulators in the U.S. accused the car maker of using illegal software to mask emissions. Chief Executive Sergio Marchionne denied the auto maker subverted emissions rules or violated any regulations.

Earlier Friday, shares were mixed during Asian trading hours after data showed Chinese exports fell sharply last month amid weak demand, adding to some investors' concerns about the health of the world's second-largest economy. Hong Kong's Hang Seng Index advanced 0.5% and Japan's Nikkei Stock Average added 0.8%, while markets in Australia shed 0.8% and Shanghai declined 0.2%.

In currencies, the WSJ Dollar Index fell 0.3%, with the dollar last down 0.4% against the yen, 0.5% against the euro and 0.2% against the British pound. The Turkish lira fell over 0.6% against the dollar, capping a volatile week.

In government bond markets, the yield on the 10-year U.S. Treasury note fell slightly to 2.341% from 2.358% Thursday, its lowest settlement of the year, while 10-year German bund yields were at 0.232% from 0.232%. Yields move inversely to prices.

--Nick Kostov, Emily Glazer, and Eric Sylvers contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

January 13, 2017 08:48 ET (13:48 GMT)

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