Sensex heads towards fourth straight week of gains

MUMBAI (Reuters) - India's stock markets edged higher on Friday to trade at over two-month highs, tracking global markets that gained after the European Central Bank (ECB) on Thursday signaled its readiness to inject more stimulus.

Indian markets that were shut on Thursday for a local holiday, took cues from Asia, where stocks extended a global rally on Friday after ECB President Mario Draghi said further rate cuts were being considered to stimulate the euro zone economy.

"Global markets are positive and ECB signal was positive, that's a key trigger," Alex Mathews, head of research at Geojit BNP Paribas said.

The benchmark BSE Sensex was trading up 0.77 percent after rising as much as 0.98 percent to 27,555.06, its highest level since Aug. 20. The index has gained over 1 percent for the week.

The broader Nifty gained 0.62 percent after earlier rising 0.93 percent in the session, also its highest intraday level since Aug 20. The index has gained 0.83 percent for the week.

Both indexes were on track to snap a two-session losing streak and record a fourth straight week of gains.

All sectors were trading in the green with the exception of select capital goods and telecommunications stocks.

Financial shares that took a beating on Wednesday rebounded strongly.

Housing Development Finance Corp gained 1.45 percent, HDFC Bank advanced 1.2 percent, while ICICI Bank rose 1.5 percent.

Consumer goods stocks such as ITC and Hindustan Unilever rose. ITC added 2.5 percent while Hindustan Unilever gained 1.3 percent.

Cairn Energy was trading 3.2 percent higher after reporting a smaller-than-expected fall in second-quarter profit.

Among the losers Larsen & Toubro was down 1.14 percent. Bharti Airtel fell 2.8 percent while Idea Cellular lost 5.7 percent.

(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)