Investing.com - European equity indices rose Friday, with brighter-than-expected regional economic data boosting sentiment.

At 04:10 ET (08:10 GMT), the DAX index in Germany climbed 0.6%, the CAC 40 in France edged 0.1% higher and the FTSE 100 in the U.K. rose 0.4%.

German economy grew in Q1

The German economy grew significantly more in the first quarter than previously estimated, expanding by 0.4% compared with the previous quarter, ahead of the  preliminary reading of 0.2% growth.

Germany’s sluggish economy has not grown at that pace since the third quarter of 2022, when it expanded by 0.6%, and actually contracted in the final quarter of last year by 0.2%.

Germany had also been expected to be badly affected by tariffs due to its export-oriented economy, with the U.S. being Germany’s biggest trading partner in 2024.

Also boosted sentiment in the region, British retail sales jumped in April by a much stronger than expected 1.2% month-on-month, after a downwardly revised 0.1% increase in March.

The increase marked the fourth back-to-back monthly rise in retail sales - a feat last achieved in 2020, when consumer spending rebounded after the first COVID-19 lockdown.

European equities valuations “less compelling”

However, despite these signs of improvements, Bank of America remains negative on European equities, warning of near-term risks while valuations have become less compelling following a recent rally.

European equities have surged 18% since mid-April, narrowing the gap with historical highs. But this rally “leaves European equities priced for stronger global growth ahead,” a scenario BofA does not believe will materialize.

Despite a better outlook for structural factors—such as Germany’s fiscal loosening, the EU’s defense spending initiatives, and renewed integration efforts—the U.S. bank argues these drivers will take time to influence earnings and regional GDP.

“Our economists remain sceptical on the near-term growth outlook,” the bank said, in a note, citing projections of just 2.5% nominal GDP growth for the euro area in 2025, compared to 4%–4.5% for the U.S.

AJ Bell lifts full-year guidance

In the corporate sector, British investment platform AJ Bell (LON: AJBA ) stock soared after it raised its FY25 guidance following stronger-than-expected third-quarter results.

The financial company reported a 6% beat in EPS, driven by a 7% outperformance in profit before tax compared to consensus estimates, while announcing a £25 million share buy-back program.

Crude set for weekly decline on supply worries

Oil prices retreated Friday, on course for their first weekly decline in three weeks, weighed down by renewed supply pressure with OPEC+ considering another increase in production levels.

At 04:10 ET, Brent futures dropped 0.8% to $63.95 a barrel, and U.S. West Texas Intermediate crude futures fell 0.8% to $60.73 a barrel.

For the week, both benchmarks have fallen around 2%, falling to their lowest in more than one week, following two weeks of gains.

The Organization of Petroleum Exporting Countries and allies, collectively known as OPEC+, are weighing the possibility of another production boost at their upcoming meeting on June 1, Bloomberg News reported Thursday.

According to delegates cited in the report, one option under consideration is a supply increase of 411,000 barrels per day in July, though no final decision has been made.

The market is also closely watching U.S.-Iranian nuclear negotiations which could determine the future supply of Iranian oil. The fifth round of talks will take place in Rome later Friday.