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UPDATE 2-Europe's STOXX 600 jumps more than 1% to end week higher

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

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Austria's Verbund tops STOXX 600 on windfall tax announcement

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Teleperformance leads gains among French stocks

(Updates to close)

By Shreyashi Sanyal and Devik Jain

Nov 18 (Reuters) - Europe's STOXX 600 index closed higher on Friday in a broad-based rally led by retailers and automakers, while investors awaited minutes from the European Central Bank's last policy meeting and kept an eye out for a slew of data due next week.

The pan-European benchmark index jumped 1.2% to log its best one-day performance in more than a week.

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The index has gained 5.1% so far in November and is on pace for its second straight month of gains, driven by several factors including better-than-expected earnings, despite lingering worries of a recession in the euro zone.

Data this week showed inflation hovered at a record high in October. S&P Global's euro zone flash composite Purchasing Managers' Index (PMI) survey scheduled on Nov. 23 is expected to show activity falling further from October.

"The underlying momentum seems quite better than the macro might suggest it should be, which is quite encouraging," said Ian Williams, economist and strategist at Peel Hunt.

The STOXX 600 index is down more than 11% this year as investors feared aggressive interest rate hikes by the European Central Bank (ECB) could deepen a recession in the euro zone already reeling with an energy crisis triggered by Russia-Ukraine conflict.

Three top policymakers said on Friday the ECB must raise interest rates high enough to dampen growth as it fights sky-high inflation and it could soon start running down its 5 trillion euro ($5.2 trillion) debt pile, even as some hint at slower rate hikes.

"It's a very difficult balancing act because inflation has surprised consistently to the upside and they have all got it wrong," Williams said.

Minutes of the ECB's October policy meeting are due on Nov. 24.

Automakers and retailers were the top gainers, up over 2.1% each.

Austrian hydropower producer Verbund and energy and environmental services provider EVN jumped 8.9% and 6.4%, respectively.

The Austrian government announced plans to introduce a temporary windfall tax of up to 40% for oil and gas firms and power companies, while noting that the levies can be reduced to 33% if the companies make green investments.

Teleperformance SE rose 3.7% after the French office support technology company announced its exit from the "highly egregious" part of trust and safety business.

SAP dipped 2.3% after Jefferies downgraded the German business software group's stock to "underperform". (Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Subhranshu Sahu and Shounak Dasgupta)