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Europe stocks close narrowly higher after debt deal

Europe stocks close narrowly higher

European equities closed narrowly higher on Thursday, with investors underwhelmed by U.S. lawmakers finally reaching a deal to lift the country's borrowing limit, averting a debt default in the short term.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European closed marginally up 0.1 percent at 1,267.48 points, with European shares consolidating after a sharp rally yesterdayand investors shifting their focus to corporate news.

The unofficially closed flat, while the German closed up 0.4 percent and the French closed down 0.1 percent.

Obama: There are no winners here

The deal in the U.S. extends the government's borrowing authority until February 7 and funds government agencies until January 15. The Office of Management and Budget said previously furloughed federal workers should report to work Thursday morning and Congressional leaders began to appoint budget negotiators to find a longer-term budget solution.

However, despite embracing the deal, analysts warn that it merely "kicks the can down the road". Treasury Secretary Jack Lew welcomed the bipartisan action by Congress but was cautious about getting the U.S. economy back on track following the impasse. "At the same time, we remain committed to reaching agreement on a balanced fiscal package that will create jobs, grow our economy, and put us on a path toward long-term fiscal sustainability," Lew said.

President Obama made an address from the White House on Thursday where said, "Let's be clear: there are no winners here." He said that unnecessary damage had been done to the U.S. economy, and said that before the shutdown the economy had been growing and deficits had been slashed.

He argued that the shutdown had "encouraged our enemies, it's emboldened our competitors, and it's depressed our friends," adding that nothing had done more damage to the U.S.' credibility in the world than the spectacle of the last few weeks, although he argued that the country would bounce back.

(Read More: Obama signs budget deal; government set to reopen)

In the U.K., promising retail sales data gave the country's high streets something to cheer. Sales volumes rose 0.6 percent on the month, 2.2 percent year-on-year, according to the Office for National Statistics. Economists had expected a rise of 0.4 percent.

Peugeot drives higher

Peugeot Citroen shares closed over 4.5 percent higher after reports in the Wall Street Journal on Thursday that China's Dongfeng Motor Corporation is still considering investing in the French car maker.

Shares in KPN closed around 7.9 percent lower after Mexico's America Movil dropped plans to boost its stake in the Dutch telecom, and said it was undecided whether to retain its current stake.

Nestle said weak demand in emerging markets continue to weigh on revenues and signaled a slowing of its underlying sales growth to 4.4 percent. However, investors cheered its performance when compared to peers Unilever and Danone, and shares closed around 3.1 percent higher.

(Read More: Nestle CEO: Debtdeal is key to our success in US)

In other stocks news, Swiss drugmaker Roche posted an 8 percent rise in third quarter sales; however shares closed down by around 0.5 percent.

(Read More: Roche confirms outlook as sales rise 8%)

Shares of French supermarket Carrefour provisionally closed up 3.1 percent after the company announced sales in its French hypermarkets returned to growth in the third quarter.

(Read More: Carrefour says French recovery gains momentum)

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