Earnings in focus
Earnings released Thursday morning were also in focus. Swiss banking group Credit Suisse reported third-quarter net profit above analyst forecasts as investment banking revenue rose.
The group was cautious on the final quarter, saying it had a strong advisory and underwriting pipeline but the pace of execution would depend on market conditions, with shares falling over 1 percent.
The U.K.'s biggest grocer announced in September that it had overstated its 2014 first-half profits by £250 million ($409 million). On Thursday, it confirmed its profit overstatement at £263 million. After concluding an investigation into its accounts the accountancy firm Deloitte said that there had been similar accounting practices in prior reporting periods.
Consumer goods company Unilever almost joined Tesco in the poor performers, with shares down as much as 3 percent after the company warned of a tough outlook and a decline in sales.
Shares of Lloyds banking group were trading down 0.8 percent Thursday morning before recovering to trade up 0.6 percent, after a report that the group would soon announced planned 9,000 job cuts over the next three years.
Finnish telecoms equipment group Nokia reported stronger-than-expected profitability at its core networks business in the third quarter. It raised the unit's full-year outlook on the back of major network roll-outs in North America and China. Its shares were closed provisionally up 3.5 percent.
U.S. stocks surged on Thursday after heavy-equipment maker Caterpillar boosted its full-year profit outlook and an unexpected increase in euro-zone manufacturing eased worries about the global economy, recovering from Wednesday's lows.
Thursday's economic reports had the four-week average of Americans filing for jobless benefits dropping to a 14-year low.
The Dow Jones Industrial Average was trading sharply higher, as were the S&P 500 and the Nasdaq.
On Wednesday, U.S. stocks turned lower, following the S&P 500's biggest jump in a year, as investors considered the fatal shooting of a soldier in Ottawa, reports of gunfire in the halls of Canada's Parliament and oil falling to a more-than two-year low.
China's HSBC flash manufacturing purchasing manager's index (PMI) rose to a three-month high of 50.4 in October, above the bank's final reading of 50.2 last month. However, the report highlighted issues in Beijing's economy with factory output falling to a five-month low. The data comes amid speculation of additional stimulus measures to boost growth.
Follow us on Twitter: @CNBCWorld