European shares closed higher on Thursday after better-than-expected initial jobless claims data from the U.S. The numbers are important as a key metric for Fed policy makers, who have said they may taper off asset purchases once the labor market improves.
(Read More: Thursday's Markets Are All About Jobless Claims)
The pan-European FTSEurofirst 300 Index closed provisionally 0.6 percent higher at 1,193.40 points and all key country indexes posted gains.
However, euro zone fears continued to weigh on investor sentiment, limiting gains. The recent Cypriot bailout is likely to be top of the agenda at Friday's Eurogroup meeting.
"Draft documents associated with the program suggest the Troika have dramatically revised up their estimate of the size of the black hole in Cyprus' finances to 23 billion euros - an extraordinary 140 percent of GDP - from the initial estimate of 17 billion euros," Emily Nicol, an economist at Daiwa Capital, said in a research note.
Euro zone finance ministers will probably offer Portugal and Ireland seven extra years to pay back their bailout loans, a senior official said on on Thursday.
"The intention is very positive," Jeroen Dijsselbloem, the chairman of the euro zone finance ministers, told a news conference. "I hope that we will be able to finalize that tomorrow."
Italy's 3-year borrowing costs fell to their lowest since January after the Treasury sold 7.2 billion euros ($9 billion) of debt on Thursday. The Treasury had planned to sell up to 7.5 billion euros of debt.
Emerging market investment manager Ashmore led the Euro Stoxx 600 higher after posting first quarter inflows that smashed analysts' forecasts. Ashmore closed 12.99 percent higher and European asset managers such as Schroders were also boosted.
Russian steelmaker Evraz was the FTSE 100's worst performer after it posted a surprise 2012 loss on Thursday; shares plummeted to close 11.39 percent lower. Basic resources and autos were the only European sector indexes to close in negatively territory, hit by concerns about first quarter earnings season.