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Europe shares close higher on dovish Fed

European shares closed higher on Thursday, as investor sentiment was boosted after the Federal Reserve said the U.S. economy is rebounding and that interest rates would stay low for some time.

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC 40
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IBEX 35
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The pan-European FTSEurofirst 300 Index closed provisionally up around 0.6 percent at 1,395.60 points, with all sectors and major country indexes posting gains.

The U.K.'s FTSE 100 Index closed provisionally up around 0.5 percent. Germany's DAX Index and France's CAC 40 both closed provisionally up around 0.7 percent.

At the end of a two-day policy meeting on Wednesday, Fed Chair Janet Yellen implied that the central bank would keep interest rates low for some time. The central bank also said it would cut monthly asset purchases to $35 billion from $45 billion in July, as expected.

U.S. stocks held onto gains at Thursday's open, before falling back.

"While the Fed sounded upbeat about the economy, it certainly managed to maintain a dovish tone," Stan Shamu, a market strategist at IG Markets, said in a research note.

Despite the tick up in inflation and fall in unemployment, Janet Yellen feels the easy monetary conditions will have to be maintained in order to keep the recovery on track."

Read MoreFed tapers $10 billion more; economic outlook cut

Back in Europe, U.K. retail sales fell in May, dragged down by fuel, even as sales of sportswear and toys were boosted by the World Cup.

Retail sales volumes were 0.5 percent lower compared with the previous month, but 3.9 percent higher compared to the same period in 2013. The slowdown in sales follows April's 10-year high of 6.9 percent.

Read MoreUK May retail sales fall despite World Cup fever

In stocks news, shares in Rolls Royce closed up around 8 percent after the engine maker announced a share buyback and said it was on track to meet its 2014 guidance.

U.K. housebuilder Berkeley Group closed up around 3.7 percent after it was upgraded by both Citi and Deutsche Bank.

U.K. telecom company BT also closed up around 2 percent after a favorable ruling by regulator Ofcom regarding competition in the sector.

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