European stocks closed slightly higher on Thursday, despite concerns about the unwinding of ultra-easy monetary policy in the U.S. and as Ukrainian concerns began to creep back into the markets.
Yellen 'curve ball'
The pan-European FTSEurofirst 300 Index provisionally closed higher by 0.1 percent at 1,306.06 points, having pared earlier losses following positive data from the U.S.
After starting the day lower - in response to U.S. Federal Reserve Chair Janet Yellen's comments suggesting that interest rate hikes could happen sooner than expected - they turned higher after some positive U.S. data.
The Fed said the benchmark federal-funds rate would remain near zero for a "considerable time" after its asset-purchase program ends, and Yellen attempted to clarify the term, saying it is "hard to define" but "probably means something on the order of around six months."
(Read more: Yellen indicates rate hike sooner than expected)
Michael Hewson, the chief market analyst at CMC Markets described Yellen's comment as a "curve ball", unsettling markets with her suggestion about the course of interest rates. "Whether she intended to be taken so literally is open to debate but it was enough to prompt a sharp reversal," he said in a note.
The central bank also decided to cut its monthly asset bond purchase program by another $10 billion to $55 billion per month.
On the data front, the Conference Board's index of U.S. leading indicators climbed 0.5 percent last month, signaling the U.S. economy would strengthen. Furthermore, the Philadelphia Federal Reserve Bank said its business activity index rose to 9.0 in March, up from -6.3 in February.
Separate data released Thursday had the count of Americans filing for jobless benefits rising by 5,000 to 320,000 last week, less than the 325,000 estimated by economists polled by Reuters.
The string of economic news followed weeks of geopolitical tensions and concerns about Chinese growth that had weighed on investors.
Cold War sanctions
President Barack Obama on Thursday signed an order to impose sanctions on more segments of Russia's economy in response to Moscow's annexation of Crimea.
"Diplomacy between the U.S. and Russia continues. We've emphasized that Russia still has a different path available," Obama said. "We want the Ukrainian people to determine their own destiny and to have good relations with the United States, Russia, Europe, with anyone they choose."
Obama said the new sanctions will target Bank Rossiya, which provides material support to Russian leadership, as well as 20 individuals linked to the country's annexation of Crimea.
(Read more: Obama slaps newsanctions on Russia over Ukraine)
Russia hit back against the U.S. with its own set of sanctions on Thursday. Deputy National Security Adviser Benjamin Rhodes and senators John McCain, John Boehner, Harry Reid and Mary Landrieu were just some of the Americans barred by the Kremlin, the Foreign Ministry said.
In Europe on Thursday, the European Council meeting of EU heads of state began. The leaders are discussing whether to add names to the list of 21 Russians and Crimeans already on the EU's travel-ban and asset-freeze list, as well as how to stop Europe's dependence on Russian oil and gas as President Vladimir Putin enters a period of isolation from the West.
(Read more: Ukraine: What next for battered economy?)
China bucks trend
In China, shares bucked Asia-wide losses thanks to a strong rebound in property stocks on news that two firms have received approvals to make private placements of shares, which could pave the way for more companies to raise funds amid growing fears of defaults.
(Read more: China's debt problems are bad, but not Lehman bad)
On the data front, producer price figures for Germany came in flat for the month of February, this month-on-month reading was slightly lower than expectations in a Reuters poll. Yearly figures managed to meet estimates with a fall of 0.9 percent.
Ladbrokes continues fall
In stocks news, shares of U.K. retailer Next rose 2.2 percent after it reported that its annual profit had jumped by 12 percent.
U.K. bookmaker Labrokes saw its shares continue their decline, dropping 4.5 percent on Thursday, after the country's government prospered a new tax on betting on Wednesday.
While most European bourses recovered on Thursday afternoon to close higher, the FTSE 100 closed down 0.3 percent after a 1.6 percent fall by GlaxoSmithKline shares after an experimental cancer vaccine failed in a second test.
Follow us on Twitter: @CNBCWorld