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Europe ends higher despite sharp oil declines; US jobs in focus

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European stocks posted solid gains by Thursday's close, as investors shook off the renewed declines in oil and turned their attention to Friday's U.S. jobs report.

US jobs ahead

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European STOXX 600 closed off session highs, up 1.05 percent provisionally; while sectors were positive across the board.

London's FTSE 100 popped 1.1 percent, while its domestically-focused FTSE 250 index jumped some 1.5 percent. France's CAC rose 0.8 percent while Germany's DAX closed 0.5 percent up.

For most of the session, investors in Europe were digesting the minutes from the Federal Reserve's June meeting, and preparing for Friday's highly anticipated jobs report. Federal Reserve policymakers said it was prudent to wait for more data and the Brexit vote result before raising rates, and cited a slowdown in hiring as a reason to keep rates unchanged last month, according to meeting minutes released Wednesday afternoon. The non-farm payrolls report due Friday will be the next key data followed by markets; with investors watching for signs as to whether May's disappointing headline figure was an anomaly, or not.

In addition, hopes that the U.K.'s vote to leave the European Union (EU) could prompt further easing by central banks around the world—or at least a delay in interest rate rises in the U.S.—are seen as a major driver for positive market sentiment.

Oil sinks

Need 'gangbusters data' to see Fed move: Pro

Oil markets were also eyed after prices reversed gains, to trade sharply lower in Europe's late session. Prices sank after data by the EIA revealed that U.S. crude stockpiles had fallen by 2.2 million barrels in the previous week; a far weaker inventory draw than what the API had suggested.

Brent and U.S. crude tumbled on the back of the data, trading at $47.78 and $46.48 at Europe's close. The reversal added pressure to U.S. stocks on Thursday.

Elsewhere in commodities, basic resources closed sharply higher, after a positive outlook from several brokers on particular stocks boosted sentiment. Jefferies and UBS raised their price target for Anglo American, BHP Billiton and Glencore, sending shares in all of the miners to close up above 1 percent each.

On the currency front, sterling posted strong gains against the dollar during Thursday's session, after it fell to a fresh 31-year low on Wednesday. However, by Europe's close it was trading roughly flat, at $1.2930.

Danone acquires WhiteWave Foods

In business news, Danone said it would acquire WhiteWave Foods in a deal that values the U.S. organic foods producer at $12.5 billion, in what would be the French company's biggest acquisition in 10 years. Danone shares closed almost 2 percent up, paring earlier gains.

A number of companies also reported trading updates and earnings. Britain's Marks & Spencer saw shares recover during trade, ending up over 1.5 percent, after it reported an 8.9 percent like-for-like fall in clothing and home sales in the 13 weeks to July 2, while food sales 0.9 percent.

Primark owner Associated British Foods soared some 8.9 percent after it said revenue for the 40 weeks ended June 18 was 3 percent ahead of the same period last year at constant currency. Sales at Primark in the year-to-date were 7 percent ahead of last year.

British housebuilder Bovis Homes said it had traded in line with expectations in the first half of 2016 and it is "too early" to assess the impact of the country's EU referendum. Shares of the company jumped over 5 percent.

Financials rebound post-Brexit mess

In other news, the number of British property funds suspended after the country's vote to leave the EU rose to seven on Wednesday, leaving over 18 billion pounds ($23 billion) frozen in the biggest seizing up of investment funds since the 2008 financial crisis, Reuters reported.

Aberdeen Asset Management said withdrawals from its U.K. property fund would face a 17 percent dilution levy, and that it would not fulfill later orders, but Exane BNP Paribas raised its price target for the stock. Shares of the fund manager finished up 1.5 percent as a result. Several other names which have been beaten up in recent days also rebounded including Aviva and Prudential.

7 funds lock investors out of property funds

The Italian banks were once again in focus for investors due to the large bad loan portfolio held by these lenders. Italian Prime Minister Matteo Renzi defended his country's banks saying that their bad loan problem is small in comparison to the issue of derivative exposure faced by other European lenders.

Banco Popolare fell 2.5 percent after Exane BNP Paribas cut its price target for the stock.

Ratings agency Standard & Poor's revised its outlook on an array of U.K. banks on Thursday, in light of the country's decision to exit the EU; saying that the British economy was now entering a correction phase.

Barclays, HSBC, and Lloyds saw their rating outlooks cut to "negative" from "stable". RBS was cut to "stable" from "positive". Despite this, the positive sentiment in broader markets kept these banks in the black throughout trade.

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