Politics

European shares firm, Irish stocks hit highest close in six months

* Better-than-expected U.S., German data aids sentiment

* Oil and gas, chemicals stocks perform strongly

* Irish equities close 1.1 pct higher

By Aaron Saldanha

April 5 (Reuters) - European shares rounded off a solid weekon Friday, as better than expected German and U.S. databolstered risk appetite, while Irish stocks surged to their bestclosing level in nearly half a year amid a possible delay toBrexit.

Hopes of a U.S.-China trade deal also aided sentiment.

Data showed a narrower French trade deficit and a rise inGerman industrial output in February, while U.S. employment inMarch accelerated from a 17-month low.

The pan-region STOXX 600 index .STOXX edged up 0.1percent, as most bourses across Europe rose.

"We are in a Goldilocks scenario, where bad news is goodnews, and the good news is good," said Naeem Aslam, chief marketanalyst at TF Global Markets in London. "The U.S. jobs numberwas solid and this has pushed the European markets higher."

The STOXX 600 perked up after the data to briefly touchlevels last seen in August.

Guy Foster, head of research at Brewin Dolphin, said theequity rally "does have legs".

"There's a chance that we're in the foothills of recessionbut I don't think we are," he added.

Britain's FTSE 100 .FTSE rose 0.6 percent, after the pound GBP= weakened against the dollar due to uncertainty aroundBritish Prime Minister Theresa May's attempt to delay Brexit.

Many firms in the index rely on overseas profits, and theirvalue swells on a weaker pound. GBP/.L

In neighbouring Ireland, stocks .ISEQ rose 1.1 percent.

"Irish stocks were under pressure recently and it has beenoverly priced in that a no-deal Brexit is going to happen," CMCMarkets analyst David Madden said, adding that the rise was"more of a relief rally for Irish stocks."

Germany's DAX GDAXI rose 0.2 percent.

Hopes that the U.S.-China talks would yield a trade trucehave been a major driver for European stocks this week with autostocks .SXAP performing especially strongly. They consolidatedgains to rise 6.9 percent for the week.

U.S. President Donald Trump said on Thursday a deal withChina could be announced within four weeks.

Chemicals stocks .SX4P helped prop up the regionalbenchmark on Friday, with Switzerland'sEms Chemie HoldingEMSN.S climbing 5.9 percent after beating a first-quarter netsales target.

A 0.6 percent rise in oil prices LCOc1 supported Europeanoil and gas stocks .SXEP , which rose 0.9 percent. Britain's BP BP.L gained 1.6 percent, while Norway'sEquinorEQNR.OL added 1.2 percent.

Morgan Stanley's recommendation to buy oil field servicesfirms helped France'sTechnipFMCFTI.PA , which rose 3.9percent.

Telecom stocks .SXKP fell 1 percent, with VodafoneVOD.L ending down 2.2 percent.

Banks .SX7P were also weak, falling half a percent.

More complications arose for a possible merger of DeutscheBank DBKGn.DE and CommerzbankCBKG.DE . The European CentralBank will ask Deutsche Bank to raise fresh funds before it givesthe go-ahead for a deal, a source told Reuters.

The demand could complicate a bid to create Europe'sthird-largest bank out of Germany's top two lenders, which havestruggled to recover since the financial crisis.

Commerzbank shares rose 1.7 percent, while those of Deutschebank slipped 1.2 percent.

Zurich Insurance Group AGZURN.S shares dropped 4.4percent as they traded ex-dividend. (Reporting by Aaron Saldanha, Muvija M and Josephine Mason inLondonAdditional reporting by Medha Singh in BengaluruEditing by Edmund Blair) ((Aaron.Saldanha@thomsonreuters.com; +91 80 6749 1130; ReutersMessaging: Aaron.Saldanha@thomsonreuters.com@reuters.net))


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