Breaking a four-day losing streak, the pan-European STOXX 600 index advanced 0.6%, with London's FTSE 100 outperforming its European peers after Barclays jumped 7% on strong results.
That lifted regional banks <.SX7P>, putting them on course for their best monthly performance in over a year. Other sectors considered more economically sensitive such as automakers and oil & gas also found favour.
"Better than expected results from Barclays triggered renewed interest in banking shares, most of which are trading on depressed levels so value investors will be particularly interested," said Russ Mould, investment director at AJ Bell.
Meanwhile, data on Friday showed euro zone economic activity fell this month, while the German manufacturing sector expanded at a faster rate in October. But the German services activity shrank, suggesting Europe's largest economy is operating at two speeds.
"Opposite forces are in play at the moment," said Emmanuel Cau, head of European equity strategy at Barclays. "Globally you've these two main sources of growth - U.S. and China - that are still recovering, so part of the European market will still benefit from the strength outside of Europe."
"But the domestic part of the market exposed to mobility and restrictions are impacted by the second wave."
Surging COVID-19 cases in the region have led to more curbs of late, with France looking set to widen a curfew to more than two thirds of its population.
Finance Minister Bruno Le Maire said GDP will likely contract in the fourth quarter, adding that curfew measures would cost around two billion euros ($2.36 billion).
With some optimism this week stemming from new fiscal stimulus in the UK, markets now look to the European Central Bank meeting next week when analysts expect the bank to signal policy support in December.
Globally, the mood was one of caution with less than two weeks to go before the U.S. presidential election.
Planemaker Airbus jumped 5.6% after it told suppliers to be ready for an output hike once demand recovers from the coronavirus crisis.
Luxury group Kering fell 3.2% as its star Gucci brand underperformed rivals.
Swiss engineering company ABB was among the biggest drags on the STOXX 600 after saying it expects its orders and revenue to remain under pressure for the rest of 2020.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila and Andrew Cawthorne)
By Sruthi Shankar and Susan Mathew