Brexit agreement paves the way for the next phase of discussions

European stocks closed higher at the end of the week as investors reacted to progress in Brexit negotiations and a long-sought deal regarding global banking regulations. The pan-European Stoxx 600 was up almost 0.8 percent, with almost all sectors and major bourses in positive territory.

Europe's banking index led the gains on Friday morning, up more than 2 percent after global regulators signed a long-awaited agreement in the previous session. The deal represents the last piece of the Basel III puzzle and is a compromise between U.S. and European regulators over capital levels and measurements of risk in the industry.

Brexit continues to keep investors on their toes with the U.K. and European Union finally agreeing upon three particular issues that had impeded negotiations, paving the way for the next phase of discussions. Sterling rose more than half a percent to hit a six-month high against the euro after the announcement.

In Asia, stocks made strong gains after Chinese trade data exceeded analyst estimates and Japan’s economic growth figures were revised higher. Emerging-market stocks rallied.

U.S. stocks climbed to records as the latest jobs report bolstered optimism in the world’s largest economy, continuing equity rallies that took hold in Asia and Europe. The dollar posted its best week this year.

The S&P 500 Index and Dow Jones Industrial Average closed at all-time highs in light volume after data showed hiring increased by more than forecast in November and the unemployment rate held at a 17-year low.

The jobs data add to a run of recent news that bolstered investor optimism after the U.S. government averted a shutdown and tax reform negotiations made progress. The positive stock moves are a welcome reversal for many investors, who earlier in the week booked profits amid an equity rotation and waning risk sentiment. Looking ahead to next week, traders see an interest-rate increase by the Federal Reserve as pretty much a given.