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UK midcaps at one-month high

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Eyes on French election, US payrolls

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Aixtron rallies on strong orders

(Updated at 0833 GMT)

By Sruthi Shankar and Jesus Calero

July 5 (Reuters) - European stocks rose to a more than a

one-week high on Friday after the Labour Party's return to power

in the UK general election gave investors a sense of calm, while

German chip systems manufacturer Aixtron rallied on reporting

strong orders.

The pan-European STOXX 600 index was up 0.4%,

touching its highest level since June 26.

The UK's blue-chip FTSE 100 added 0.2% and the

domestically oriented FTSE 250 jumped 1.2% to a

one-month high after the Labour Party surged to a landslide

victory on Friday, ending 14 years of often tumultuous

Conservative government.

British homebuilders outshone other sectors as the Labour

manifesto promised to speed up home-building by reforming the

country's planning system.

"No matter what the political or policy outcome will be,

after all the chaos we had with the Tories over the last couple

of years, markets are for now taking the Labour Party's return

to power as a positive for the British economy," said Carsten

Brzeski, economist at ING.

Investors will shift their focus to the U.S. monthly

payrolls report later in the day and the second round of French

voting on Sunday, which will be crucial in determining the

political landscape in the euro zone's second largest economy.

Data at 1230 GMT is expected to show U.S. job growth slowed

to a still-healthy pace in June, with the unemployment rate

holding steady at 4%, which could leave the door open for U.S.

interest rate cuts this year.

Traders are pricing in a near 70% chance of a 25 basis

points rate cut by the Federal Reserve in September, as per LSEG

data, and 50% odds of another cut in December.

French markets have come under selling pressure since

President Emmanuel Macron called for a snap election last month,

with concerns that a far-right win could add to worries over

fiscal sustainability.

However, the far-right National Rally (RN) party looked

set to fall short of an absolute majority after the second round

run-off vote on Sunday, recent polls showed.

French stocks rose 0.3% on Friday, and looked set

for their biggest weekly gain since early May.

European tech stocks topped sectoral performance

with a 1.1% rise.

Aixtron rallied 16% to the top of STOXX 600 as

its strong order intake for the second quarter overshadowed cuts

to its full-year forecast.

Other chip firms including ASM International, BE

Semiconductor and ASML Holding climbed

0.7%-1.1%, spurred by Samsung's prediction of a 15-fold surge in

second-quarter operating profit.

Swiss drugmaker Roche rose 0.9% after the U.S.

health regulator approved its Vabysmo prefilled syringe for

treating major causes of vision loss.

(Reporting by Sruthi Shankar in Bengaluru and Jesus Calero in

Gdansk; Editing by Sonia Cheema and Mrigank Dhaniwala)