June 12 (Reuters) - European shares rose on Friday, with major indexes jumping more than 1 percent as oil prices fell on renewed hopes of a Middle East diplomatic breakthrough, adding further optimism to the market.

Brent crude futures fell 3.7 percent, extending losses from the previous session, after U.S. President Donald Trump backed away from plans to strike Iran and said a deal could be reached as early as next week.

The pan-European STOXX 600 index rose 1.9 percent to 633.21 points, posting a weekly gain of 1.7 percent.

Spain’s IBEX 35 led the gains among European stock market indices, advancing by more than 2.6 percent and touching its highest level ever.

The only loser among the sub-indices today was the energy sector, which fell by one percent under the weight of declining crude prices.

Travel and leisure stocks were the best performers in today's session, rising 4.1 percent to their highest level in five months.

The banking sector index led sector gains with a rise of 4.3 percent.