MILAN: European shares rose to their highest level in nearly four months in early deals on Friday, helped by some well-received earnings updates and gains in Bayer after a $7 billion acquisition.

The pan-European STOXX 600 rose 0.2 per cent by 0724 GMT and was set for its fifth straight week of gains as inflows into the region's equities continued with confidence over its economic recovery offseting a fresh focus on political risk.

Germany's DAX index was flat, just below the fresh all-time high hit in the previous session, while Britain's FTSE eased back 0.4 per cent after a record close on Thursday.

According to EPFR Global data European equity funds posted solid weekly inflows overall, but Spanish equity funds suffered their second largest outflow on record and redemptions from Italy climbed to levels last seen in the second quarter of 2015.

BASF was the biggest single stock boost to the STOXX, up 1.5 per cent. The world's third-largest maker of crop chemicals agreed to buy significant parts of Bayer's seed and non-selective herbicide businesses for 5.9 billion euros in cash. Bayer was up 1.4 per cent.

Among top gainers on the STOXX were Provident Financial , up 10 per cent, after the British subprime lender put in place a recovery plan for its home credit business which it said was set to post a 2017 loss of up to 120 million pounds.

A well-received earnings update also boosted shares in Man Group, up 3.9 per cent. The British hedge fund said assets rose 7.9 per cent in the third quarter, boosted by market gains and net inflows to its funds.

(Reporting by Danilo Masoni, Editing by Helen Reid)