European equities advanced on Friday, delivering their first weekly gain in a month, as optimism over progress toward reopening the Strait of Hormuz pushed crude prices lower.

The Stoxx Europe 600 Index closed up 0.3%. Financial stocks outperformed the broader market, with UBS Group AG rising 1.3% following reports that the Swiss lender is exploring a merger with a foreign bank.

Brent crude dropped to around $106 per barrel as negotiators from the United States and Iran were discussing a phased agreement under which Iran would reopen the Strait of Hormuz.

Falling energy prices brought some relief. Previously, inflation concerns had driven bond yields higher and reignited expectations that central banks would step up policy tightening.

Despite these pressures, European equities have held up relatively well, with the benchmark index about 3% below its record high set in August.

"The market has noticed the warning signals coming from the bond market, but thanks to a solid economic environment, it remains robust enough to keep a close watch on the situation and adjust positions accordingly as the US midterm elections approach," said Guillermo Hernandez Sampere, head of trading at MPPM.