European stocks rallied Friday, recording their second consecutive weekly gain, as investors' appetite for risk returned after a selloff spurred by concerns about the next U.S. interest-rate hike.

U.S. stocks closed higher on Friday as fears of an interest-rate hike ebbed with the S&P 500 and the Nasdaq posting weekly gains, but the Dow Jones Industrial Average extended its losing streak for a fourth week. Friday's gains follow a day of losses on Thursday, when worries that the Fed could hike interest rates in June sent markets lower in both the U.S. and Europe.

Asia's benchmark stock index swung between gains and losses as Japanese shares fell as the yen advanced, offsetting gains in Chinese and Taiwanese shares. The biggest source of tension at the G-7 meeting over the weekend, held in northern Japan, was the strong yen, with Japanese officials concerned about the currency's impact on exports. Finance Minister Taro Aso signaled a willingness to take action against "disorderly" moves.

Based on MarketWatch materials