Europe Markets

Europe shares close higher on ECB stimulus hopes


European shares closed higher on Wednesday, amid expectations that further European Central Bank (ECB) stimulus measures would be announced at its policy committee on Thursday.

The pan-European Euro Stoxx 600 Index ended the day in positive territory, with all major country bourses higher with the exception of the U.K.'s FTSE 100. The U.K. index was pressured lower by shares of Royal Mail. Its stock fell again on Wednesday—by 1.6 percent on the day—on the news that U.K. regulators would not be ruling against some of its competitors.

Hopes for ECB stimulus rose after data showed business activity in the euro zone fell to a 16-month low in November. The figures confirmed fears that the region's economy is faltering, but also raised the prospects that the ECB would be more willing to do something about it.

Read MoreEuro zone business activity slumps to 16-month low

"At this point, any shaky macroeconomic numbers coming out of the euro zone only put further pressure on the ECB to weigh in with a more significant stimulus package," Daniel Sugarman, a market strategist at ETX Capital, told CNBC via email.

Brenda Kelly, a market strategist at brokerage firm IG, agreed. "It would take a slew of upside surprises for the ECB to simply do nothing at this point," she told CNBC via email. "The downside risks to inflation have certainly increased."

UK budget speech

U.K.-listed homebuilders were pressured lower after Chancellor of the Exchequer George Osborne gave his Autumn Statement, updating politicians and the public about the government's taxation and spending plans. In it, Osborne outlined plans to reduce property taxes, known as "stamp duty". However, shares of airlines and easyJet gained after Osborne announcing that air passenger duty for children would be scrapped.

Meanwhile, shares of heavily-weighted Shell closed provisionally down 1.2 percent after a rumor resurfaced on Tuesday that it might make a bid for its rival BP.

Read MoreWhy Shell/BP takeover rumors are back

In addition, shares of FTSE 100-listed Sage climbed almost 5 percent after the software company said it was on track to meet its 2015 targets.

Earlier in the session, European shares wobbled on reports that there had been an accident at a nuclear power plant in south-east Ukraine. However, investors were soothed after Energy Minister Volodymyr Demchyshyn issued a statement saying the accident posed no danger and that the plant would return to running as normal on December 5.