By Riva Gold

European stocks advanced Friday ahead of a key reading on the U.S. economy and earnings from major banks.

The Stoxx Europe 600 rose 0.5% in morning trading, while London's FTSE 100 index added 0.4% after ending higher for 13 straight days, its longest winning streak on record.

Europe's auto sector initially led gains in morning trading, but quickly reversed course midmorning to becoming the only sector in negative territory after French prosecutors said they opened a probe against Renault SA on emissions, sending shares of the French car company down 4.7%.

Shares in rival Fiat Chrysler Automobiles suffered a steep fall Thursday after 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.

The moves came after U.S. stocks fell Thursday as losses in financial shares dragged down major indexes. Futures pointed to a 0.1% opening gain for the S&P 500 on Friday, ahead of a report on U.S. retail sales and fourth-quarter earnings from J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co..

Shares of U.S. financials 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.

"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," he said.

Higher interest rates tend to boost lenders' profitability, as the interest rates they charge on many loans are directly tied to the Fed's target rate.

Earlier Friday, shares were mixed during Asian trading hours, with Hong Kong's Hang Seng Index advancing 0.5% and Japan's Nikkei Stock Average adding 0.8%, while markets in Australia shed 0.8% and Shanghai declined 0.2%.

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.

In currencies, the WSJ Dollar Index inched down 0.1%, with the dollar last down 0.2% against the yen and 0.3% against the euro. The Turkish lira fell 1.3% against the dollar while the Britishpound advanced 0.5%.

In government bond markets, the yield on the 10-year U.S. Treasury note was little changed at 2.352% from 2.358% Thursday, while 10-year German bund yields were at 0.242% from 0.232%.

-Nick Kostov and Eric Sylvers contributed to this article.

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

(END) Dow Jones Newswires

January 13, 2017 05:43 ET (10:43 GMT)

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