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Europe stocks close higher on Germany deal

European equities closed higher on Wednesday with investors boosted by strong earnings, a coalition deal in Germany, and strong performances from U.S. stocks continuing.

The pan-European FTSEurofirst 300 Index provisionally closed higher up 0.6 percent to 1,301.10 points, with basic resources stocks posting the largest gains.

Confidence was boosted after modest gains on Wall Street overnight. U.S. stocks rose again on Wednesday, with benchmark indexes furthering their record climb, as a positive read on consumer confidence and a decline in jobless claims cheered Wall Street just ahead of the holiday shopping season.

In Asia, Chinese shares outperformed but Asian equity markets were largely mixed in quiet trade due to profit-taking and rising political tensions in the region.

In Europe, at its semi-annual Financial Stability Review, the European Central Bank said euro zone financial sector stress had fallen to levels not seen since before the global financial crisis began in 2007, but that the sector remained fragile. It said the key risks to financial stability were economic and financial shocks, tensions in government debt markets, global financial market turbulence and bank funding challenges in the euro zone periphery.

(Read more: Euro zone 'stress' down to near pre-crisis levels: ECB)

UK third-quarter growth confirmed at 0.8 percent

Trading has been subdued this week ahead of Thursday's Thanksgiving holiday in the U.S. and market players unwinding their bets as the month draws to an close.

On the data front, the U.K. second estimate for third-quarter gross domestic product confirmed an earlier estimate of 0.8 percent growth, month-on-month.

Consumer sentiment data from German think tank GfK managed to beat market expectations. The forward-looking figure for December showed a tick higher to 7.4, against an estimate in a Reuters poll of 7.1.

Staying in Germany, conservatives and the center-left Social Democrats finally agreed to a "grand coalition" after all-night talks, paving the way for Chancellor Angela Merkel to form a government by Christmas. The German DAX provisionally closed up 0.7 percent on the news.

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FTSE
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CAC 40
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IBEX 35
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Meanwhile, the Italian Senate voted to oust former leader Silvio Berlusconi from parliament for a tax fraud conviction he received in August. For his part, Berlusconi said on Tuesday that his revamped "Forza Italia" party would no longer support Prime Minister Enrico Letta's government.

The Italian benchmark FTSE MIB closed provisionally higher by 0.7 percent on Wednesday.

(Read more: Senate expels Berlusconi from Italian parliament)

Accor shares full

In stocks news, Compass Group announced a fall in full-year pretax profit on Wednesday, but shares of the catering company closed higher by 1.29 percent after it released details of a buyback program and increased its full-year dividend.

Shares of Aker Solutions closed higher by 7.48 percent after Norwegian holding firm Aker purchased raised its stake by 6 percent in the oil services firm.

Shares of French hotel group Accor came under pressure after it unveiled a new strategy on Wednesday. It plans to divide its hotel business in two in a bid to improve the group's performance and boost shareholder returns; shares fell by 4.5 percent.

Royal Mail shares provisionally closed higher by 6 percent after reporting a half-year profits rise, aided by growing revenue from its parcel business.

(Read More: Royal Mail first half profits almost double)

Water supplier United Utility Group raised its dividend on Wednesday after reporting a rise in first-half profit and revenue; shares closed down 0.7 percent.

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