Spain's IBEX 35 stock index opened Friday with a moderate advance and was heading for a weekly gain of 2%, although optimism over expectations of rate cuts was offset by concerns over the Middle East war.

The equity markets welcomed a lower-than-expected employment data in the United States, which, according to the securities firm Renta 4, "endorses the idea of moderation in the US labor market, which is necessary for the Fed to start cutting interest rates".

The Bank of England meeting also contributed to these speculations, which paved the way for lower borrowing costs. In fact its governor, Andrew Bailey, said there could be more reductions than investors expect.

"The market is discounting between 2 and 3 (BoE rate) cuts for this year, the first in June (which Governor Bailey neither rules out nor confirms), although they will be data-dependent (inflation, labor market)," said analysts at Renta 4.

Israeli forces shelled areas of Rafah on Thursday, as Prime Minister Benjamin Netanyahu brushed aside U.S. President Joe Biden's threat to withhold weapons from Israel if it assaults the southern Gaza city.

Meanwhile, on Friday, markets will scrutinize more U.S. macroeconomic indicators, with the release of the University of Michigan's consumer confidence survey, while awaiting the crucial April inflation report to be released on Wednesday, May 15.

Against this backdrop, at 07:05 GMT on Friday, Spain's selective IBEX 35 stock market index was up 31.90 points, or 0.29%, to 11,082.00 points, while the FTSE Eurofirst 300 index of large European stocks was up 0.52%.

For the week as a whole, the IBEX 35 is up 2.09%.

In terms of individual stocks, Fluidra stood out, with an increase of 5%, following the publication of its quarterly results this week.

Elsewhere, in the banking sector, Santander lost 0.13%, BBVA gained 0.58%, Caixabank advanced 0.59%, Sabadell fell 0.38%, Bankinter gained 0.43%, and Unicaja Banco rose 0.56%.

Among the large non-financial stocks, Telefónica gained 0.19%, Inditex fell 0.30%, Iberdrola rose 0.67%, Cellnex gained 0.51%, and the oil company Repsol rose 0.95%.

(Information by Tomás Cobos; edited by Javi West Larrañaga)