European equities closed higher on Thursday after both the European Central Bank (ECB) and the Bank of England (BoE) kept their main interest rates unchanged, while U.S. stocks rallied on positive news ahead of jobs data on Friday.
Central banks in the spotlight
The pan-European FTSEurofirst 300 Index provisionally closed higher by 1.4 percent at 1,289.48 points, with all sectors and all major bourses staging a rally. The FTSE 100 closed up around 1.5 percent, as did the German DAX, while the FTSE MIB finished higher by 2.3 percent.
U.S. stocks advanced after a report had applications for jobless benefits falling, casting a positive light on the labor market the day before the government releases its monthly jobs report.
The main focus for investors in Europe, however, was the policy meeting by the ECB's Governing Council. The central bank decided to keep its key interest rate unchanged at 0.25 percent, meeting market expectations.
ECB President Mario Draghi said the euro zone area will experience low inflation for a protracted period of time but was not at risk of deflation, leading to a pop in the euro.
He repeated the bank's pledge to keep interest rates "at present or lower levels for an extended period of time" and said the bank was firmly determined to take further decisive action.
Last Friday, official data revealed that inflation fell to 0.7 percent in January. This was below the 0.9 percent expected by economists, and significantly lower than the ECB's 2 percent target.
Meanwhile, the BoE left both interest rates and its asset purchase target unchanged, saying the decision was taken in the context of its forward guidance policy that has been the subject of much speculation.
Analysts had not forecast a major announcement, but expected BoE officials to use their meeting to figure out how to direct interest rate expectations now that the U.K. economy was improving.
(Read More: Bank of England holds fire on rates, guidance revamp)
In Asia, equities rebounded on Thursday on the back of upbeat earnings reports and as investors went bargain hunting after recent selling, but caution prevailed ahead of Friday's U.S. jobs report.
Vodafone shares higher
Individual stocks news also helped push bourses higher in Europe on Thursday. Shares of Alcatel Lucent provisionally closed higher by 9.2 percent despite the telecom equipment maker posting a net loss of 1.3 billion euros ($1.76 billion) last year. Instead, traders cheered the restructuring plans that have been put in place with hopes that CEO Michel Combes is closer to a long-awaited turnaround for the company.
(Read More: Alcatel posts 2013 loss, to sell enterprise unit)
Shares of Vodafone finished the day higher by 3.7 percent, after reporting a 4.8 percent hit to organic service revenue in the last three months of 2013. Vodafone sold its 45 percent stake in Verizon Wireless to U.S. telecoms group Verizon Communications in one of the biggest deals in corporate history last September. This means that it has cash to burn — but it is also viewed by some analysts as a more likely takeover target.
(Read More: Vodafone revenues hit by Europe weakness)
Meanwhile, Credit Suisse posted a fourth quarter turnover of 267 million Swiss francs ($297 million), below expectations in a Reuters poll for 448 million Swiss francs. Shares finished the day higher by 1.5 percent.
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