Europe Markets

Europe stocks close higher on Italy hope

European market closes higher

European equities closed higher on Thursday, with the expulsion of former prime minister Silvio Berlusconi from the Italian Senate fuelling hopes of stability, and after a positive handover from Wall Street boosting investor sentiment.

The pan-European provisionally closed higher by 0.4 percent at 1,305.34 points. Nearly all sectors posted gains with leading the charge, after a sell-off in recent sessions.

After the expulsion of Italian politician and three-time former Prime Minister Silvio Berlusconi from parliament on Wednesday, Milan's closed higher by around 0.9 percent on Thursday. Banks and UBI Banca both closed up over 2 percent.

(Read More: Berlusconi's gone - but Italy's big problems remain)

Morale in businesses across the euro zone increased again in November, boosting hopes that firms could spur on the euro zone's bumpy economic recovery. The European Commission's monthly business and consumer survey, published Thursday, revealed that economic sentiment increased to 98.5 in November - up from 97.7 in October. The figure was higher than the 98 expected by analysts polled by Reuters.

(Read More: Euro zone business morale rises in November)

European stocks were also boosted by upbeat U.S. data overnight that helped the Dow and S&P 500 close at fresh record highs, while the Nasdaq ended at its highest level in over thirteen years. Fewer Americans than expected filed applications for jobless benefits last week, while a private gauge of consumer sentiment topped estimates for November.

U.S. markets were closed on Thursday for the Thanksgiving holiday.

Meanwhile, Asian equity markets followed their Wall Street counterparts higher on Thursday, led by an over 1 percent rally in Japanese and Chinese shares. The Nikkei closed at its highest level since December 2007.

German deal

In Europe, investors watched the aftermath of the coalition deal between conservatives and the center-left Social Democrats in Germany. After weeks of negotiations, the parties finally agreed to a "grand coalition" following all-night talks, paving the way for Chancellor Angela Merkel to form a government by Christmas. The German closed the day up around 0.4 percent.

(Read More: Germany has a new government, what next?)

The Bank of England made a surprise announcement on Thursday, saying that it would stop one method of housing market stimulus. The central bank said it would halt the Funding for Lending (FLS) scheme for household lending. Many analysts saw this as out-of-step with repeated statements from the government and Bank of England Governor Mark Carney that the U.K. was not undergoing a housing bubble.

(Read More: Bank of Englandsurprise marks Carney's housing fears)

Thomas Cook surges

Travel firm Thomas Cook announced further cost savings in its full-year earnings report, along with a jump in profits; shares closed higher by 14.75 percent.

Rio Tinto enjoyed hefty gains in an otherwise subdued session as investors responded bullishly to the company's new growth plans; shares provisionally closed higher by 4.16 percent.

Imperial Tobacco and British American Tobacco fell 1.9 percent and 0.62 percent respectively on reports that the U.K. government was set to announce a review of cigarette packaging in an effort to deter youngsters from smoking by introducing plain cigarette cartoons.

In stocks news, shares of retail group Kingfisher closed down 4.39 percent after it warned of challenging markets, particularly in France, despite posting a rise in third-quarter profits.

U.K. homebuilder Wolseley saw its shares slide by 1.6 percent after it warned there were no signs of improvement in its continental European markets.

Follow us on Twitter: @CNBCWorld