Bareksa.com - European stocks ended slightly higher on Friday, halting a week-long sell-off, with Airbus rising after sources said the European plane maker is set to clinch a deal with Rolls-Royce for A330 engines.

Airbus shares gained 1.6 percent while Rolls-Royce shares were up 2.2 percent after sources told Reuters Airbus is set to upgrade its A330 with engines provided exclusively by Rolls-Royce, opening a new chapter in the fight for wide-body jet orders with Boeing's 787 Dreamliner.

The FTSEurofirst 300 index of top European shares ended 0.1 percent higher at 1,371.29 points.

The index lost 1.7 percent during the week, hurt by downbeat U.S. growth data as well as worries over violence in Iraq, snapping a 10-week long run of weekly gains - its longest winning streak since mid-2012.

The week was also marked by investment outflows, with European equity funds suffering redemptions of $1.6 billion, their biggest outflows in over a year, according to data from BofA Merrill Lynch Global Research.

"The low-growth environment, flagged by the latest U.S. and European data, is actually not a bad thing for equities," said David Thebault, head of quantitative sales trading at Global Equities, in Paris.

"In the long run, it forces asset allocators to switch out of fixed income, where the returns are extremely low, and into more risky assets such as stocks."

Thebault recommends buying convertible bonds as a hedge against a potential stock market correction, while maintaining exposure to a further leg-up in stocks in the longer term.

Around Europe, UK's FTSE 100 index was up 0.3 percent, Germany's DAX index up 0.1 percent, and France's CAC 40 down 0.1 percent.

The euro zone's blue-chip Euro STOXX 50 index lost 0.2 percent, to 3,227.85 points, with its retreat limited by a strong support level at 3,225, representing the index's 50-day moving average.

Shares in Barclays stabilised, up 0.5 percent, following their 6.5 percent drop on Thursday after New York's attorney general filed a securities fraud lawsuit accusing it of giving an unfair edge to its U.S. high-frequency trading clients in its "dark pool" business.

Banco Espirito Santo sank 11.4 percent, losing ground after Luxembourg justice authorities launched an investigation into three holding companies of Portugal's Espirito Santo banking family.

MOOD STILL BULLISH

Despite the market's losses in the past week, the FTSEurofirst 300 is up 4.1 percent since the start of the year, hovering below a 6-1/2 year high hit earlier this month.

A Reuters poll released on Thursday showed that investors are bullish over the outlook for European shares in the second half of the year, betting on them extending their rally, helped by the ECB's stimulus measures.

"The ample liquidity and the expectation of a pick-up in earnings is keeping bourses in green," said Philippe Uzan, chief investment officer at Edmond de Rothschild AM, which has 164 billion euros ($224 billion) under management.

"Within the equity space, we still prefer European stocks ... the slight improvement in the region's economies should boost corporate profits in the second part of the year."

According to data from Thomson Reuters Datastream, profits for European companies are expected to rise by 7.5 percent in 2014. (Source : Reuters)