European shares edged higher on Friday, limping into the weekend in thin volumes thanks to another good day for the region's banks, with a still-intact technical uptrend set to provide continued support next week.

The broader financials sector, including insurers and fund managers, added most points to the FTSEurofirst 300 <.FTEU3> index, which provisionally finished up 0.1 percent at 1,087.63 points, to add to a 1.1 percent gain in the previous session.

That had been driven in large part by the European Central Bank's injection of a further half-trillion euros in funds to the banking sector, to add to similar action in December; liquidity boosts that have helped underpin demand for equities.

The LTRO in Europe has been an extreme positive and off the back of that equities have done well, Jaspal Phull, portfolio manager at fund-of-hedge-fund provider Stenham Advisors. You're starting to see more dispersion between good names and bad names, although most of the money is being made on the long side.

While some managers had started the year more cautiously, as time's gone on, they've started to increase their allocations and there's definitely a sense that they are willing to take more risk, he said.

Among financials adding most points to the index were Dutch bancassurer ING , up 3.1 percent, French investment bank BNP Paribas , up 1.5 percent and Barclays , which closed up 2.1 percent.

(Reporting by Simon Jessop)