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Direct Line jumps as Aviva to buy co

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Puig Brands falls after recall of spray batches

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Moncler rises on rating upgrade

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STOXX index notches biggest wkly rise in ten

(Updates to market close)

By Joao Manuel Vicente Mauricio and Johann M Cherian

Dec 6 (Reuters) - European shares eked out gains on

Friday, with French stocks logging their biggest daily rise in

three weeks as investors factored in a potential budget despite

ongoing political uncertainty, while also parsing an upbeat U.S.

jobs report.

The pan-European STOXX 600 was up 0.1%, logging its

seventh consecutive day in advances and its strongest weekly

performance in ten.

French assets saw a relief rally after President Emmanuel

Macron said he would appoint a new prime minister in the coming

days whose top priority will be getting a 2025 budget adopted by

parliament, after the government was toppled by lawmakers.

The country's benchmark CAC 40 index rose 1.3% to

touch a fresh three-week high. The index also logged its

steepest weekly rise in ten, trimming its annual drop to 1.5%

from over 3% earlier in the week. French bond yields also

dropped.

However, Andrew Kenningham, chief Europe economist at

Capital Economics, struck a cautious tone as he said, "The key

point as far as French politics is concerned is that there is no

realistic prospect of a stable government being formed with a

mandate to address France's fiscal problems."

"And there is a risk that the current deadlock drags on

and that the next legislative elections... don't solve the

problem."

European luxury stocks jumped 3% and touched a

two-month high, with Italy's Moncler among the top

gainers with a 5% rise after Goldman Sachs upgraded its shares

to "buy".

Germany's DAX closed higher by 0.1% to clinch

an all-time high and logged its biggest one-week rise in over

two months even as political uncertainty prevailed.

Across the Atlantic, data reflected a resilient jobs market

in the U.S., and investors priced in that the Federal Reserve is

on track to cut rates in December.

Among other movers, Vivendi rose 1.9%. The French

media conglomerate will seek shareholder approval on Monday for

a proposed break-up of the group.

Direct Line rose 5.6% after the British insurer

said it was set to recommend a sweetened 3.61 billion pound

($4.60 billion) cash-and-stock takeover by Aviva, if the

bigger rival makes a formal offer.

Puig Brands fell 3.5%, having shed as much as 9%

earlier, after the Spanish cosmetics company said its Charlotte

Tilbury brand was conducting a global withdrawal for select

batches of its make-up setting spray.

BMW rose 2.7% after Jefferies upgraded the German

automaker's stock to "buy" from "hold".