Europe surges on Fed pledge, Russian stocks bounce

European shares closed sharply higher on Thursday with global sentiment boosted after the U.S. Federal Reserve said it had confidence in the economy.

Fed boosts stocks


The pan-European FTSEurofirst 300 closed around 2.8 percent higher at 1,353, its strongest daily gain in three years as after sectors and bourses ended in positive territory.

The German DAX climbed 2.6 percent, London's FTSE 100 saw gains of 1.9 percent, with French and Spanish stocks both up over 3 percent at market close.

After the Federal Reserve's monthly meeting on Wednesday, Fed Chair Janet Yellen said the central bank is unlikely to start its rate hike process for "at least the next couple of meetings."

The central bank surprised some market watchers by leaving the phrase "considerable time" in its statement, but as a reference to the timing of rate hikes rather than a policy.

Read MoreFed keeps 'considerable time'...sort of

There is still no set timetable for when rates will actually rise, but market consensus is that the first hike will come in mid-2015.

U.S. stocks surged Thursday, extending Wall Street's best day of the year, after the Federal Reserve said it would be patient in increasing interest rates.

Equities came off session highs, however, as oil turned lower.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq all added over 1 early trade.

Thursday data also had U.S. jobless claims falling by 6,000 to 289,000 last week, the lowest since early November.

Putin watched

The Fed meeting comes at a time of economic turmoil in Russia. On Thursday, Russian President Vladimir Putin blamed "external factors" for the country's ongoing economic problems but failed to reassure investors hoping for quick answers. Moscow's MICEX Index was up as much as 6 percent during Thursday's session.

The ruble steadied against the dollar as Putin spoke following a volatile start of the day. The battered currency eased back to around 61 against the dollar.

Read MorePutin: Russia will bounce back within two years

Elsewhere, in Greece's first round of a snap presidential election, the prime minister's preferred candidate failed to gain the 180 votes he needs to win. The second and third round of voting will take place before January 2015.

On the data front, the German Ifo business climate survey managed to beat market predictions with a figure of 105.5 against a consensus 105.4 in a Reuters poll. The release highlighted that dropping oil prices and a fall in the euro were "seasonal gifts" to the German economy.

Oil stocks bounce

In stocks news, oil exploration companies including Afren and Russia-exposed lenders like Raiffeisenbank saw a hefty bounce after heaving selling over the last few sessions.

The CEO of the Austrian lender said it expects a negative impact of the slide of the Russian ruble on its Russian unit.

British airways owner IAG said it had approached Aer Lingus about a takeover bid, which was rejected by the Irish company's board. Shares in both firms rallied on the news.

Meanwhile, shares of building materials firm Lafarge rose 3.7 percent after a price target upgrade by Deutsche Bank. The French CAC was the standout gainer on Thursday morning, surging 2.4 percent.

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