It came after European shares flicked in and out of positive territory throughout the day. The market slipped in late afternoon trade, however, after head of the Federal Reserve Bank of St. Louis, James Bullard, said the Fed's first interest rate hike could come at the end of the first quarter of 2015.
In the U.K., Bank of England Governor Mark Carney announced plans to cap some mortgages and toughen lending criteria in an effort to cool the housing market. Homebuilders reacted positively, and the construction and materials sector was up 0.5 percent.
Read MoreBoE's Carney reveals plans to cool housing market
Shares in Persimmon and Barratt Development closed around 5 percent and 4.7 percent higher respectively.
Overall gains were muted by a struggling banks sector. Barclays was in focus after the New York Attorney General said it was suing the U.K. bank over claims it deceived investors about using "dark pools". The bank pulled a $1.5 billion bond offering following the news. It shares closed down around 6.7 percent on Thursday.
Shares in Standard Chartered ended the day around 4.8 percent lower after the British bank issued a profit warning. It said it expected first-half operating profit to fall by 20 percent on the year before and revenue to fall by 5 percent.
Read MoreBarclays pulls bond offering after lawsuit emerges
In other stocks news, Apple chipmaker Dialog Semiconductor and Austria's AMS said they were in preliminary discussions regarding a possible merger of equals. Dialog shares closed up around 1.8 percent higher on Thursday.
The London Stock Exchange (LSE) announced it would buy the Frank Russell Company—which owns and runs the U.S. Russell indexes—for $2.7 billion. The LSE will also launch a $1.6 billion rights issue in September. Its shares closed up 7.6 percent in afternoon trade.
Meanwhile, U.S. pharmaceutical giant AbbVie said it was willing to move "quickly and cooperatively" in striking a takeover deal with U.K. rare diseases specialist Shire.
In the U.S.,stocks fell on Thursday as government data prompted downward revisions to U.S. economic growth in the second quarter and after Bullard's comments. Thursday's economic reports had personal spending rising a less-than-expected 0.2 percent in May, after holding flat in April, and personal income rising 0.4 percent.
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