The European markets rose on Friday, as heavily weighted energy stocks rallied after crude oil prices rose for the third straight day and banking stocks gained after American Express reported better than expected first quarter profit.

In economic news, the Munich-based Ifo Institute for Economic Research said its business climate index for Germany rose to 83.7 in April from 82.2 in March. Meanwhile, economists had expected a slight increase to 82.3.

The U.S. Commerce Department said in its report that new home sales fell 0.6% to an annual rate of 356,000 in March from a revised February rate of 358,000. Economists had expected new home sales to remain unchanged compared to the 337,000 originally reported for the previous month.

In a separate report, the U.S. Commerce Department said that durable goods orders fell 0.8% in March following a downwardly revised 2.1% increase in February. Economists had expected orders to fall 1.5% compared to the 3.5% increase that had been reported for the previous month.

Crude for June delivery rose $1.63 to $51.25 a barrel on the New York Mercantile Exchange, by the time the European markets closed, despite a huge surplus and weak global demand.

The FTSEurofirst 30 index of pan-European blue chips closed 2.33% higher at 810.38 points, while the narrower DJ Stoxx 50 index rose 2.49% to 1,982.22 points.

Around Europe, the U.K.'s FTSE 100 index climbed 3.43% to 4,155.99, while France's CAC 40 index surged up 3.13% to 3,102.85 and Germany's DAX index rose 3.00% to 4,674.32.

Oil stocks climbed, tracking crude oil prices. BP, Europe's biggest oil company, and Total, the third biggest, surged up 4.8%, while Royal/Dutch Shell, the second biggest, jumped 5.5%.

Similarly, mining stocks gained after copper prices rose. BHP Billiton, the world's biggest miner, rose 3.6%, while Anglo American, the second biggest, climbed 7.3% and Rio Tinto, the third biggest, surged up 4.8%. Copper miner Antofagasta gained 4.6%.

Banking stocks advanced after American Express reported first quarter earnings analysts' expectations. HSBC, Europe's largest bank, rose 3.6%, while BNP Paribas, France's largest bank, surged up 4.8% and Deutsche Bank, Germany's biggest lender, added3.8%.

Royal Bank of Scotland, Britain's second largest bank, gained 5.7% and Barclays, the third largest, rallied 8.6%.

Automotive stocks also advanced after Ford, the only major U.S. automaker that has not sought government aid, posted a smaller first quarter loss than analysts estimated.

Volkswagen, Europe's biggest carmaker, rose 2.9%, while BMW, the world's biggest maker of luxury cars, climbed 3.7% and Daimler, the second largest, surged up 3.5%.

AstraZeneca, Britain's second biggest drugmaker, gained 5.2% after the company's Iressa cancer drug won European Union backing to treat adult patients with locally advanced or metastatic non-small lung cancer with a certain gene mutation.

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