By Riva Gold

U.S. financial stocks rose Friday as the start of banks' earnings season ignited buying in the sector.

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 stock indexes to record highs.

Financial stocks were the best performers in the S&P 500 on Friday, climbing 1.4% in recent trading. Shares of big banks also jumped, with the KBW Nasdaq Bank index up 1.9%.

The Dow Jones Industrial Average gained 30 points, or 0.2%, to 19921. The S&P 500 rose 0.3%, and the Nasdaq Composite was 0.5% higher.

Shares of J.P. Morgan Chase & Co. rose 2% after the largest U.S. bank by assets posted stronger-than-expected fourth-quarter results. Bank of America's stock gained 1.8% even as its revenue for the latest quarter came in below expectations. Wells Fargo gained 2.9% despite a fall in the bank's fourth-quarter profit.

U.S. stocks had fallen Thursday 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.

Stocks soared in the weeks following the election on hopes that the new administration will help accelerate a rise in growth and inflation. But for the past month U.S. stocks have largely moved sideways, keeping the Dow Jones Industrial Average just shy of the 20000 milestone.

"I think the market had been giving President-elect (Donald) 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.

In government bond markets Friday, the yield on the 10-year U.S. Treasury note rose to 2.418% from 2.358% Thursday, its lowest settlement of the year. Yields move inversely to prices.

The Stoxx Europe 600 rose 0.8%, led by banks and health-care companies, which had been among the worst performers for most of the week.

French prosecutors said they opened a probe against Renault on suspicion of emissions fraud, sending sharesof the French car company down 2.4%. Renault has previously denied using any so-called defeat devices to cheat on emissions tests.

Shares of Fiat Chrysler Automobiles gained more than 4% 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%.

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

(END) Dow Jones Newswires

January 13, 2017 10:46 ET (15:46 GMT)

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