European shares closed higher on Thursday as investors reacted to strong U.S. and European data, as well as rate decisions from the European Central Bank (ECB) and the Bank of England (BoE).
The FTSEurofirst 300 Index provisionally closed up 0.9 percent at 1,219.50 points, boosted by a strong performance from U.K. bank Lloyds. Lloyds closed up roughly 7.9 percent after reporting a return to profit for the first half of 2013, and announcing it might be ready tor restart dividend payments.
RBS shares also bounced, closing around 4.84 percent higher, on reports that Ross McEwan will become the new chief executive at the part-nationalized lender.
Britain's mid-cap FTSE 250 closed provisionally up 1.1 percent, ending above 15,000 points for the first time in history.
(Read more: Lloyds bank returns to profit, escapes cash call)
Earlier in the day, economic data gave an extra boost to stock indexes. Euro zone manufacturing activity grew for the first time in two years in July, numbers released on Thursday showed. The purchasing manager's index (PMI) rose to 50.3 in July, up from 48.8 in June, and above a flash estimate of 50.1. The data marks the first growth in manufacturing activity in two years, suggesting that the region's economy is improving.
There was more good news in the U.S., where weekly jobless claims tumbled 19,000 to a seasonally adjusted 326,000, a 5-1/2 year low, according to the Labor Department.
Furthermore, data showed that the pace of growth in the U.S. manufacturing sector accelerated in July to the highest level in two years as new orders surged.
U.S. stocks kicked off the first trading day of August with a bang, as Wall Street cheered the round of upbeat economic data, propelling the S&P 500 above the 1,700 mark for the first time.
(Read more: Societe Generale profit more than doubles)
Nestle leads European markets
Finnish refiner Neste Oil boosted stocks, closing roughly 23.69 percent higher after it reported second quarter operating profit that beat market expectations.
Shares in Societe Generale closed up roughly 11 percent, after the French lender posted earnings that more than doubled from the same period a year ago.
Shares of German supermarket Metro rose by 8.47 percent after it confirmed its outlook for the full-year, but reported weaker second-quarter sales in Europe.
Aside form earnings, investors digested key rate decisions by the ECB and the BoE. Both central banks decided to maintain interest rates at a record low of 0.5 percent and the Bank of England (BoE) opted to keep its asset purchase program on hold, but did not issue a statement about future policy.
(Read More: Bank of England holds fire before key inflation report )
Asian stocks climbed higher on Thursday as investors breathed a sigh of relief that Chinese manufacturing activity didn't fall below market expectations in July. However, the readings showed a diverging picture. The official purchasing manager's index (PMI) rose above the key 50-point threshold that demarcates expansion from contraction, but HSBC's final reading fell to an eleven-month low of 47.7 in July, in line with its flash estimate released last week.
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