European stocks were higher by the close on Friday after encouraging wage data from the U.S. for the month of December lifted sentiment among investors and helped benchmarks to reverse earlier losses.

Markets had drifted lower earlier as investors sat on edge ahead of the monthly employment data.

London's FTSE 100 was up by 0.12% at 7,210. Germany's DAX gained 0.12% to 11,599 and the CAC 40 gained 0.19% to 4,909.

Friday's performance rounded off a solid week for European stocks, with noteworthy gains in some segments of the banking sector, as well as among those companies who were hit by downgrades from analysts earlier in the week.

European currencies were weaker against the greenback after the U.S. currency staged a solid advance in the European afternoon, with the pound sterling dropping nearly 75 points for the session to trade back toward the 1.2300 handle. The euro fell around 50 points to change hands at 1.0550.

Bond markets were subjected to a late selloff, coming late in the afternoon and in response to U.S. labor data. U.K. 10-year yields gained 6 basis points to 1.47% in the wake of the U.S. employment numbers, while German 10-years rose by 5 basis points to 0.30% and French yields added 5 basis points to touch 0.83%.

In individual stocks the top riser on London's FTSE 100 was defense firm BAE Systems (BAESY) , which added 2.9%, in response to U.S. factory orders that saw the order book for military aircraft double. BAE Systems is a supplier of U.S. defense agencies and a key participant in the F-35 program.

In Germany, Deutsche Bank (DB - Get Report) stock continued to rise as investors increasingly see circumstances conspiring to brighten the outlook for the lender. This week Barclays analysts raised their price target for Deutsche to reflect recent developments, such as the resolution of a tax probe and settlement over the sale of mortgage-backed securities in the U.S.

The bank was also a winner in December's European Central Bank review of capital requirements, which resulted in Deutsche being required to hold less capital in 2017 than it did in 2016.

In France, Nokia (NOK - Get Report) was the top riser on the CAC 40, following media and investor excitement about a plan for it to return to the handset business with the rollout of six new budget-priced but branded smartphones over the coming year. The stock was up by more than 2% for the session.