European stock markets rose amid Brexit deadline extension

European stock markets rose on Friday, relieved at the European Union's agreement on a two-week reprieve that precludes Britain crashing out of the bloc without a deal next week.

The communique from Thursday's meeting of EU leaders also kept the door open to a longer extension if Prime Minister Theresa May, as expected, fails at the third attempt to gain parliament's approval for her negotiated exit deal. After two days of losses, the pan-European STOXX 600 index rose 0.3 per cent, led by 0.6 per cent gains for Germany's DAX and a 0.2 per cent rise in French stocks.

As has often been the case on Brexit, London's blue-chip FTSE 100, packed with companies dependent on international revenues which tend to lose when sterling rises, dipped 0.2 per cent. The pound, fluctuating heavily in the past week on Brexit twists and turns, was up 0.3 per cent in early trade.

Shares in Deutsche Bank, up earlier this week on the prospect of a merger with Commerzbank, rose more than 2 per cent after disclosures showed its board members received their first bonuses in four years. The retail sector led gains with a roughly 1 per cent rise, while tech stocks, on a tear after surprisingly upbeat results from chipmaker Micron earlier this week, gained another 0.6 per cent, tracking gains on Wall Street and in Asia.

German chipmaker Siltronic AG was the Stoxx 600's top gainer with a 3.6 per cent rise. Adidas AG and Puma SE both gained after a disappointing quarterly report from rival Nike Inc which hinted at a slowing of the U.S. firm's momentum in its home market.

Despite the relief, there were more signs of firms making preparations for a no-deal Brexit that is likely to send a depressive shock coursing through Europe's major economies. British low-cost airline EasyJet said on Friday it was ready to suspend the voting rights of a small number of shares to comply with rules that require 50 per cent plus one share of the company to be owned by EU shareholders following Brexit.

Goldman Sachs analysts reduced the likelihood of May's deal passing to just 50 per cent while raising the chances of "no-deal" to 15 per cent. The bank continues to put the chances of no Brexit at all at 35 per cent.