JPM JP Morgan Chase and Co

By Riva Gold 

European stocks and S&P 500 futures advanced Friday as investors waited to see whether the start of banks' earnings season could help rekindle a postelection rally.

The Stoxx Europe 600 rose 0.5% midday, while London's FTSE 100 index added 0.3% after ending higher for 13 straight days, its longest winning streak on record.

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

Shares of Bank of America Corp. rose 0.4% in premarket trading after it kicked off banks' earnings season by beating expectations on profit as its trading desk benefited from uncertainty around the U.S. election. Shares of J.P. Morgan Chase & Co. and Wells Fargo & Co. also advanced ahead of the release of their results, while Morgan Stanley added 2.6%.

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.

Europe's auto sector pared gains midmorning after French prosecutors said they opened a probe against Renault SA on emissions, sending shares of the French car company down 2.7%. Shares of Fiat Chrysler Automobiles gained nearly 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 inched down 0.2%, with the dollar last down 0.2% against the yen, 0.3% against the euro and 0.7% against the British pound. The Turkish lira fell over 1% against the dollar, capping a volatile week.

In government bond markets, the yield on the 10-year U.S. Treasury note was little changed at 2.355% from 2.358% Thursday, while 10-year German bund yields were at 0.238% from 0.232%. Yields move inversely to prices.

Nick Kostov, Christina Rexrode and Eric Sylvers contributed to this article.

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

(END) Dow Jones Newswires

January 13, 2017 07:26 ET (12:26 GMT)

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