By Helen Reid
LONDON (Reuters) - European shares inched up to new one-month highs on Friday as trade tensions showed signs of easing, while results disappointments drove some sharp moves.
The STOXX 600 rose 0.2 percent while Germany's DAX, which is highly sensitive to trade and China, gained 0.5 percent after U.S. President Trump made comments indicating he would want to avoid a Sino-U.S. trade war and rejoin the Trans-Pacific Partnership (TPP) trade pact.
"Markets have given cautious welcome to this news. Welcome, because avoiding a trade war is a clear economic positive. Cautious, because market trust in U.S. presidential announcements is, perhaps, a little limited," said UBS Wealth Management chief economist Paul Donovan.
The index was on track for its third straight week of gains, its longest winning streak since January.
Investors have begun to shrug off geopolitical concerns to focus instead on a results season expected to support equity markets.
The beginnings of European companies' first-quarter results were largely positive, though misses were badly punished.
Shares in British software firm Sage sank 19 percent, the biggest decline on the STOXX, after the company cut its full-year revenue guidance as software subscription growth slowed in the first half.
On the other hand, Finnish paper maker Stora Enso gained 3.7 percent after reporting stronger than expected first-quarter results.
Cosmetics giant L'Oreal reported a strong sales beat thanks to good performance from China and luxury cosmetics.
"L'Oreal reported a much stronger-than-expected start to the year as first-quarter like-for-like sales growth of +6.8 percent came in well ahead of DB and consensus (forecasts), undoubtedly making L'Oreal best-in-class among its European HPC (and staples) peers," wrote Deutsche Bank (DE:DBKGn) analysts.
But the shares came back after touching a five-month high in early deals, last trading up just 0.5 percent. Traders put the muted reaction down to technical selling and profit-taking.
M&A news continued to be a key driver.
Klepierre shares rose 2.2 percent after the commercial real estate firm said it had dropped a bid for Hammerson and would not pursue a takeover of the UK firm.
"Klepierre throws in the towel," wrote Stifel analysts, adding they do not see a different potential bidder for Hammerson.
Hammerson's shares meanwhile dropped 13 percent to trade at 452.7 pence, erasing nearly all the gains the stock had made after Klepierre's first takeover bid on March 19.
Micro Focus rose 5.4 percent to the top of the STOXX, its second day of strong gains after reports Elliott Management had taken a stake in the firm.
Elsewhere Galapagos rose 4.2 percent after the biotech firm said its Idiopathic Pulmonary Fibrosis drug was moving into phase III trials.
Overall mining and industrial stocks were the best-performing, enjoying a boost from metals prices which surged higher this week after sanctions on Russian aluminum firm Rusal.