UPDATE 2-Banks sizzle as European stocks log fourth week of gains

* STOXX 600 gains for fourth week in a row
* Euro zone banks see biggest weekly gain since March 2017
* Deutsche Bank gains after U.S. settlement

(Updates to close)
By Sruthi Shankar
Sept 13 (Reuters) - A surge in banks, miners and automakers
galvanised European stocks on Friday, as continued rotation into
the cyclical sectors amid signs of progress in U.S.-China trade
talks drove the STOXX 600 to its fourth straight week of gains.
In a week that saw trade tensions between Washington and
Beijing thaw and the European Central Bank cut rates deeper into
negative territory and relaunch bond purchases with no scheduled
end-date, banking shares were the star performers. Euro zone banks .SX7E , which wavered after the ECB
decision on Thursday, rallied 2.4%, with analysts citing the
central bank's easing of the terms of its long-term loans to
banks and introduction of tiered deposit rate as offsetting the
pain of negative rates.
The euro zone banks index, up 7% on the week, tacked on its
biggest weekly gain since March 2017.
"The new tiering system for the banks ought to help the
North European banks that have built up large excess deposits
while the cheaper loans should help the funding costs of the
Southern banks," Jefferies analysts wrote in a client note.
According to Jefferies' calculation, the old system (without
tiering) was costing euro area banks 7.14 billion euros per
year, while the new system will cost them 5.62 billion euros per
year.
German banks are set to benefit by 295 million euros,
Italian banks by 221 million euros and Spanish banks by 234
million euros, analysts at Jefferies said.
Indeed, Italian banks .FTIT8300 rallied with a 3.2% gain,
with main indexes in Milan .FTMIB and Madrid .IBEX rising
between 0.4% and 0.6%, respectively.
Caixabank CABK.MC and Banco Sabadell SABE.MC both up
more than 7%, were the top gainers on the STOXX 600.
Deutsche Bank DBKGn.DE rose 3% after becoming the first of
16 financial services companies to resolve claims that it
conspired to rig prices of bonds issued by Fannie Mae FNMA.PK
and Freddie Mac FMCC.PK . In a change of heart among investors who had been buying
defensive stocks for much of this year on worries about global
trade disputes tipping the world into a recession, momentum
stocks such as automakers and miners saw a huge demand this
week.
Trade-reliant commodity-linked miners .SXPP jumped 2.7%,
leading gains among major European sectors, and automotive
.SXAP stocks were boosted by fresh indications that a
prolonged trade war between the United States and China was
thawing.
After Beijing and Washington made tariff concessions to each
other, U.S. President Donald Trump said he could consider an
interim trade deal with China ahead of high-level negotiations
in October. Both the pan-European STOXX 600 index .STOXX and the euro
zone only index .STOXXE closed about 0.3 higher on the day,
while tacking on more than 1% for the week.
The food & beverage index .SX3P was the biggest decliner
on the STOXX 600 as investors continued to rotate out of
defensive stocks.
Roche Holding ROG.S was the biggest boost to main stocks
index as it reported positive data from a primary progressive MS
(PPMS) study. Shares of Atlantia ATL.MI tumbled 8% after three employees
of companies owned by the Italian infrastructure group were
placed under house, as part of an investigation into the safety
of motorway viaducts following the collapse of a bridge in
Genoa. Traders said the arrest revived concerns that the government
could make good on a threat of revoking the company's motorway
concession.
The London Stock Exchange LSE.L jumped another 3.6% after
it rejected the Hong Kong bourse's $39 billion takeover offer,
opting to stick with its planned purchase of data and analytics
group Refinitiv. Thyssenkrupp's shares TKAG.DE rose 2% to a fresh ten-week
high after Singapore's state investor GIC Pte Ltd GIC.UL
raised its stake in the ailing German conglomerate. Its shares
have surged some 40% since mid-August, boosted by hopes for a
sale of its prized elevator division.