Cyclical stocks lifted European shares on Friday, recovering some losses as well-received earnings reports boosted shares in Volvo and Ericsson, though the ongoing political malaise held back Spanish equities.

The pan-European STOXX 600 was up 0.1 per cent, rebounding from its lowest closing level so far in October.

Spain's benchmark IBEX was in negative territory, however, down 0.2 per cent ahead of a special Cabinet meeting on Saturday which could see Spain suspending Catalonia's autonomy.

While the IBEX is still up around 9 per cent so far this year, it has lagged the STOXX 600 in October, down around 1.7 per cent since Catalonia's independence referendum on October 1.

“Things have not deteriorated sharply ... (and) because we haven't actually got to that stage, I think it is quite helpful for the beginnings of a negotiation,” Ken Odeluga, market analyst at City Index, said, referring to potential negotiations between Madrid and Catalonia.

Elsewhere, company results were in focus, with Swedish truck maker Volvo, the biggest STOXX riser, up 6.8 per cent and hitting a record high after beating expectations.

Volvo was joined by Ericsson , whose shares jumped 3.4 per cent after its update.

European third quarter earnings are expected to grow 4.5 per cent from the same period in 2016, an increase of 1.3 per cent excluding the energy sector, according to estimates from Thomson Reuters I/B/E/S.

More broadly, cyclical sectors such as materials and financials were the biggest support to the STOXX, with banks up 0.8 per cent and basic resources gaining 0.6 per cent.

News that the US Senate passed a budget blueprint which would pave the way for tax cuts, underpinned these more risky assets.

“Maybe with tax cuts now coming back onto the path in terms of possibly coming into being, that's an additional boost and should actually underpin markets going into the end of the year,” City Index's Odeluga said.

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