By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets broke a five-day losing streak on Friday, with regional banks bouncing back after an ugly selloff spurred by troubles at the Portuguese Espirito Santo conglomerate.

The Stoxx Europe 600 index gained 0.4% to 337.73, trimming its weekly slide to 2.9%.

The benchmark dropped 1.1% on Thursday, when concerns about the robustness of Espirito Santo International (ESI) sent shivers through the European financial sector. Trading in shares of Banco Espirito Santo SA and Espirito Santo Financial Group SA -- subsidiaries of ESI -- was halted on Thursday and remained suspended on Friday. Read: Portugal's banking turmoil revives darkest nightmares about Europe

Portugal's PSI 20 index closed at the lowest level since October amid the tumult on Thursday, but climbed 1.5% to 6,196.40 on Friday.

Southern European banks also rebounded after sharp losses, with shares of Banca Popolare di Milano Scarl up 2.1% and Banco Popular EspaƱol SA up 1.4%.

Imperial Tobacco Group PLC (ITYBY) rallied 4% in London after the tobacco company confirmed it's in talks buy assets and brands from Reynolds American Inc. (RAI) and Lorillard Inc. (LO).

The U.K.'s FTSE 100 index advanced 0.3% to 6,694.30. France's CAC 40 index gained 0.5% to 4,321.47, while Germany's DAX 30 index climbed 0.5% to 9,704.23.

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