European stock markets moved higher Friday, boosted by banks and drug makers, amid speculation Spain may be setting the stage for a bailout request.
The Stoxx Europe 600 index added 0.5% to close at 275.78. On the week, the index lost 0.1%, as investors banked some profits after the benchmark jumped to a 15-month high last week on the back of easing measures in the U.S.
U.S. stocks were higher on Wall Street .
"Stock markets discount the future and if the risk of a potential disaster is receding it will help the markets," said Neil Wilkinson , senior fund manager for European equities at Royal London Asset Management.
"A bailout for Spain doesn't resolve the crisis, but it removes an element of tail risk," he added.
Shares of drug makers helped lift markets in Europe , with Novo Nordisk AS moving up 1.3% after UBS lifted its rating to buy from neutral.
Novartis AG also gained, up 1.5%, while Roche Holding AG picked up 1%.
Helping set the trading tone, the Financial Times reported that European Union authorities are helping Spanish officials draft a plan for economic reforms focusing on measures that could be demanded by international lenders in a rescue program. The plan is expected to be revealed next Thursday, the newspaper reported, citing officials involved in the discussions.
A spokesperson from the European Commission said it is in "close contact" with the Spanish government over new reform measures, but denied that it would serve as the basis for an official aid request, MNI News reported.
Spain's IBEX 35 index rallied 2.6% to 8,230.70, with shares of Banco Santander SA 3.6% higher. The index closed out the week 0.9% higher.
Mr. Wilkinson from Royal London Asset Management said Spain probably won't be weighed by strict conditions in a potential bailout-an outcome that has stirred concerns that the country may not accept outside aid.
"There's a growing recognition that you can't cut your way to growth and people recognize that Spain has already done a reasonable amount of austerity measures," he said.
But even if the pain in Spain is to be removed from investors' risk agendas, other dangers to future, positive moves in equity markets loom on the cusp of third-quarter earnings season, he said.
"The economy is still in a pretty tricky state of affairs. The [purchasing managers' indexes] have been poor, macro data have been poor and the economy is being downgraded. There's a recognition of a slow-growth environment," Mr. Wilkinson said.
"Corporate earnings are the risk, short term. The market has re-rated upward because of reduction in risk, but not because the underlying fundamentals have improved."
In the U.K. , shares of iPhone 5 carrier Vodafone Group PLC gained 2% as Apple Inc. launched its new smartphone in stores world-wide.
The FTSE 100 index, however, swung between small gains and losses for most of the session and closed slightly lower at 5,852.62, with energy firms' shares on the decline. For the week, the index gave up 1.1%.
BP PLC fell 0.7%, while BG Group PLC gave up 1.1%.
In Germany , financial firms ranked among top gainers. Deutsche Bank AG added 1.7%, while Commerzbank AG rose 1.4%.
Pharma firm Bayer AG rose 2.4%, as the European Committee for Medicinal Products for Human Use made a positive recommendation for the firm's aflibercept ophthalmic injection.
However, Adidas AG dropped 0.6% after it made adjustments to its 2015 targets, including lowering sales target for the Reebok brand.
Overall, Frankfurt's DAX 30 index closed up 0.8% at 7,451.62 and rose 0.5% on the week.
And among French stocks, Technip SA gained 2% as the oil-field services firm was awarded a contract by Statoil ASA for the Gullfaks field in Norway .
Banks were also higher. Credit Agricole SA gained 2.2%, BNP Paribas SA put on 1.9% and Societe Generale SA advanced 1%.
The CAC 40 index added 0.6% to 3,530.72 in Paris , but dropped 1.4% on a weekly basis.
Outside the major indexes, Greek gambling company OPAP SA dropped 2.3%, after Credit Suisse cut the stock to underperform from outperform due to major tax changes.