By Lisa Pauline Mattackal and Agamoni Ghosh
(Reuters) - European shares rose on Friday, on track for their best day in more than a week, as a surprise bounce in China's manufacturing activity overshadowed conflicting tones surrounding a possible trade deal between the United States and China.
The pan-European STOXX 600 index (STOXX) rose 0.3% at 0915 GMT, with China-exposed German shares (GDAXI) up 0.4%, while mining stocks (SXPP) led gains among sub-sectors following upbeat data from the world's top metals consumer.
China's factory activity unexpectedly expanded at the fastest pace in more than two years in October as new export orders rose and plants ramped up production, a private business survey showed on Friday.
"The numbers are good given it came ahead of expectations and expansion is always a welcome," said David Madden, an analyst at CMC markets in London.
The latest data is in contrast to an official survey published on Thursday, which showed China's factory activity shrank for the sixth straight month in October.
"The Caixin numbers do seem to be more impartial than official numbers from Beijing, so it is a welcome change, although U.S.-China trade is going to be the main focus for now."
Conflicting signals on trade gave investors reason for caution after a Bloomberg report said Chinese officials have doubts about whether it is possible to reach a comprehensive long-term trade deal with Washington and U.S. President Donald Trump.
But Trump later said the two countries would soon announce a site where a "Phase One" trade deal will be signed after Chile canceled a planned summit set for mid-November that was to be the venue for a signing.
After a volatile week packed with corporate news and conflicting tones on the trade front, the benchmark index was on track to end the week slightly higher.
Danish stocks (OMXC20) outperformed their European peers, boosted by transport and logistics services company DSV Panalpina (CO:DSV), which gained 8% after reporting strong third-quarter results despite challenging conditions in the freight market.
Drugmaker Novo Nordisk (CO:NOVOb) rose 1.5% after raising its sales outlook for 2019 on the back of its new drugs for type II diabetes and obesity.
BANKS LAG
Denmark's biggest lender Danske Bank (CO:DANSKE) slid 4% after narrowing its annual profit outlook as the tainted Scandinavian lender grapples to restore trust after being involved in one of the world's biggest money laundering scandals.
That pulled the banking sector (SX7P) lower and on track for a 3.6% weekly loss after sour results from Deutsche Bank (DE:DBKGn) and Credit Suisse (S:CSGN) earlier in the week.
Investors now look forward to U.S. non-farm payrolls data later in the day to gauge how the trade dispute is impacting the world's largest economy.