European shares set for their fifth week of gains

European shares were set for their fifth straight week of gains on Friday, led by defensive and retail stocks, but gains were limited as investors remained cautious about a wider economic slowdown and progress in U.S.-China trade talks.

Global equity markets were spooked at the start of the week by attacks on Saudi Arabia’s oil facilities that sent oil prices soaring and heightened geopolitical concerns in the Middle East. However, monetary loosening by central banks around the world calmed investor nerves later in the week.

Optimism is growing about deputy-level trade talks between the United States and China that aim to set the tone for high-level negotiations in October.

An index of global stock markets edged higher on Friday as stimulus measures by major central banks eased worries about growth, especially in Asian markets, while oil headed for its best week since January.

European stocks closed slightly higher, as stimulus measures by global central banks eased fears about slowing economic growth. The pan-European Stoxx 600 closed provisionally up around 0.3%, with most sectors and major bourses in positive territory.

China cut a key lending rate for the second straight month on Friday, becoming the third major central bank to cut interest rates in recent days, after the European Central Bank and the U.S. Federal Reserve.

Equity markets have largely welcomed the central bank moves, although most of the cuts was already priced in and worries about a possible global slowdown still linger.

The MSCI world equity index, which tracks shares in 47 countries, was 0.14% higher. U.S. stocks edged higher as the interest rate cut by China's central bank boosted investor sentiment and signs of co-operation on trade between the world's two largest economies allayed concerns about a slowdown in global growth. On Thursday, the U.S. Trade Representative's office said dozens more Chinese products would be excluded from existing tariffs.