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Europe shares close higher on PMI data, bank gains

European shares closed higher on Thursday, after a business activity index showed the euro zone rebounded in July.

PMIs boost sentiment

The pan-European FTSEurofirst 300 closed provisionally 0.4 percent higher at 1,382 points, after trading lower for much of the morning.

The flash composite PMI (Purchasing Managers' Index) for the euro zone came in at 54.0, up from 52.8 in June. This was a three-month high, surpassing expectations. While concerns still remain regarding France's sluggish economy, the fresh data was enough to boost sentiment in the region.

The benchmark French CAC-40 ended unofficially 0.8 percent higher.

Read MoreEuro zone business activity rebounds, France lags

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FTSE
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CAC 40
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IBEX 35
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Banking stocks posted the largest sector gains, as the sector recovered from the saga with Portugal's Banco Espirito Santo. On Thursday, media reports suggested the bank's former CEO, Ricardo Salgado, had been arrested in connection with an investigation into tax evasion and money laundering.

U.K. retail sales came in at their strongest level in ten years in the second quarter, but the figure for June was below market expectations. The pound softened slightly against the dollar on the news.

The benchmark London FTSE 100 closed unofficially 0.3 percent higher.

Mixed earnings

A slew of corporate earnings were also released on Thursday morning. Notable movers included Nokia, whose shares closed around 7.3 percent higher after the slimmed-down technology firm upped its full-year profit guidance for its core networks unit.

EasyJet shares slumped to end around 5.0 percent lower, despite the airline announcing it was on track to grow annual profit by at least 14 percent. It warned that revenues could be hit by the situations in Israel, Egypt and Russia.

Shares of Barclays closed roughly 1.7 percent higher after the U.K. bank filed a motion on Thursday to throw out the New York lawsuit that alleged the bank lied to clients over its high-speed trading venue.

U.S. stocks rose on Thursday, with the S&P 500 continuing its climb into uncharted territory, as earnings from Ford and Facebook beat expectations.

Ukraine focus remains

Meanwhile, events in Ukraine and Gaza will continue to be in focus for investors.

Ukrainian Prime Minister Arseniy Yatsenyuk announced his resignation on Thursday following turmoil in government. Meanwhile, a Ukrainian rebel commander told Reuters that pro-Russian rebels possessed BUK missiles, the type that was believed to have shot down Malaysia Airlines flight MH17.

In the Middle East, the U.S. Federal Aviation Authority lifted its ban on airlines flying to Tel Aviv, but warned that it would continue to monitor the airport following reports of rocket fire earlier this week. The United Nations Human Rights Council said Israel may have committed war crimes in its killing of hundreds of civilians during the near three-week offensive on Gaza.

Read MoreChina's factory activity at fastest pace in 18 months

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