CORRECTED-UPDATE 2-European stocks rise on China stimulus despite weak U.S., German data

(Corrects paragraph 10 to say Thyssenkrupp rose on a report
Kone was considering a bid with a private equity partner for the
company's elevator business, not Kone saying it would bid)
* All major indexes book third week of gains
* Thyssenkrupp hits 2-month high on Kone bid report
* Automakers post biggest weekly gain since early April

By Sruthi Shankar
Sept 6 (Reuters) - European markets extended gains for a
third day on Friday, as China's move to boost bank lending
outweighed data showing slower-than-expected U.S. job growth and
a fall in German industrial output.
In a strong week for European stocks after what investors
saw as a positive turn of political events in Britain, Italy and
Hong Kong as well as signals on resumption of U.S.-China trade
talks, the benchmark STOXX 600 index .STOXX rose 1.7% for the
week, its third weekly gain in a row.
Shares in trade-sensitive chemical .SX4P and industrial
.SXNP companies were the biggest percentage gainers on the
STOXX index after China's central bank said it was cutting the
amount of cash that banks must hold as reserves, boosting
liquidity to shore up the slowing economy. Hopes of stimulus for major economies, hurt by a bruising
trade war between the United States and China, have encouraged
investors to take risk despite lingering worries about a
recession.
Mixed jobs data from the world's largest economy, which
showed U.S. hiring slowed more than expected in August although
wage gains picked up, did little to change traders' bets on two
more rate cuts from the Federal Reserve this year. "European markets were trading higher before the jobs data
came out and reacted just slightly lower to that," said Ken
Odeluga, market analyst at City Index in London.
"The China news clearly had a positive effect on risk
appetite, but it's quite in-line with well-telegraphed intent
from Beijing to provide stimulus to stabilize growth."
Also feeding into the market are expectations that the
European Central Bank will cut interest rates when it meets next
week, and point to possible further moves to head off a broader
downturn.
Fresh data on Friday showed an unexpected fall in German
industrial output in July, adding to signs that manufacturers in
Europe's biggest economy are struggling. Germany's DAX .GDAXI , however, was the outperformer on
Friday with a 0.5% rise, helped by Thyssenkrupp AG's shares
TKAG.DE which jumped 5% to a two-month high after a report
Finland's Kone KNEBV.HE was considering teaming up with a
private equity partner to bid for the conglomerate's elevator
business. Auto shares .SXAP , despite cutting some gains on news of
U.S. probe against four automakers, notched their biggest weekly
gain since early April.
Shares of BMW AG BMWG.DE and Volkswagen AG VOWG_p.DE
closed nearly flat after reports the U.S. Justice Department was
investigating a decision of the automakers to reach a voluntary
agreement with California to adopt state emissions standards
violated antitrust law. Norway's Telenor TEL.OL fell 3.4% after it scrapped a plan
to create a telecoms joint venture with Malaysia's Axiata Group
AXIA.KL .
Europe's energy index .SXEP was at the bottom of the STOXX
600 as oil prices fell more than 1% amid worries about
U.S.-China trade tensions. O/R