European shares advanced Friday as bond yields stabilized and oil prices eased on hopes the Strait of Hormuz could reopen. The Stoxx Europe 600 Index rose 0.7% in London trading, heading for a 0.9% weekly gain — its first in four weeks. The banking sector led gains, with UBS Group AG shares climbing 2.5% on reports the Swiss lender is considering a combination with a foreign bank. Brent crude fell to around $106 a barrel as U.S. and Iranian negotiators explored a phased deal to reopen the strategic waterway.

European stocks are rebounding after a global bond selloff intensified in recent days, driven by surging energy prices that fueled inflation concerns and bets on further interest-rate hikes. The regional index remains about 3% below its August record. "The markets have heeded the warning signals from the bond markets but, thanks to a positive economic environment, remain robust enough to monitor the situation closely," said Guillermo Hernandez Sampere, head of trading at MPPM.

Consumer sentiment remains fragile, with UK consumer confidence barely improving in September. The Stoxx 600 Retail Index has dropped 4.7% this year, underperforming the broader benchmark's 8.2% rally. Hello Fresh SE plunged 14% to a record low after cutting its full-year revenue outlook.