European Stocks Rebound Ahead of Key Data Releases

European stocks rebounded on Friday after a sharp selloff driven by a bond market rout. The pan-European STOXX 600 index rose 0.9% to 632.77 points at 0835 GMT, reversing Thursday's 1.3% decline that marked its lowest level in over three months.

The global government bond yields surged to multi-year highs, leaving investors averse to risk assets. European banking stocks were up 0.5%, but on track for their worst weekly performance since April, hurt by concerns about higher interest rates denting the economy.

Germany's Commerzbank dropped roughly 1% after RBC downgraded the stock to 'sector perform' from 'outperform'. The energy market was also a concern, with oil prices easing as the market refocused on signs of recovering Middle Eastern supplies. However, oil hovered above the $100-per-barrel level.

Market analysts expect euro zone flash inflation data due later in the day to offer signals on the European Central Bank's monetary policy plans. A hot print could revive bets on a second rate hike from the US Federal Reserve this month, currently priced at just 25% after two top policymakers said they wanted more data before deciding what to do next.