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Europe stocks recover from session lows to eke out gains; ECB holds rates

European markets recovered from session lows to edge into the green at the close on Thursday as the European Central Bank (ECB) opted to keep interest rates unchanged.

ECB holds rates

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The pan-European STOXX 600 provisionally closed 0.19 percent higher with sectors mixed, though the banking sector led the charge with a rise of 1.16 percent.

The FTSE 100 edged 0.07 percent into the green while both the French CAC and Germany's DAX rallied 0.44 and 0.52 percent respectively.

The ECB held rates, as widely expected, but President Mario Draghi sent stocks and the euro on a wild ride with his comments on future policy. Despite repeated questions from reporters in a press conference following the announcement, Draghi never wavered from affirming there had been "no discussion" regarding the question of when the bank's bond-buying program would be extended or even wound down.

Kallum Pickering, senior UK economist with Berenberg bank, suggested that most investors will be eagerly awaiting the December meeting which could prove to be much more volatile. He said in a note, "The potential for market dislocations and volatility if the ECB didn't meet market expectations come December would be high. That the ECB didn't look to alter market expectations is significant - an extension of QE beyond March 2017 therefore is very likely."

The euro rallied hard before trimming gains whilst stocks were sent in the opposite direction.

Lufthansa shares soar

On the earnings front, Publicis reported sales in the three months to September 30 fell 0.4 percent due to lost client accounts. But the company confirmed its full-year guidance for 2016. Shares in the firm fell 5.71 percent at the close.

Meanwhile, Nestle shares were in negative territory after it reported sales for the first nine months of the year that missed expectations and the Swiss food firm lowered its full-year guidance.

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Deutsche Bank shares rallied up 3.8 percent on the back of a German magazine report suggesting the Qatari royal family would be ready to take part in a capital increase of Germany's biggest lender. Elsewhere, Barclays and Bank of Ireland posted gains of 3.2 percent and 6.7 per cent respectively.

Pharma giant Roche confirmed its outlook for 2016 and said third quarter group sales rose 3 percent, but shares were trading under pressure.

Lufthansa outperformed the broader market with shares soaring 10 percent in morning trade as the German airline raised its profit target for the year on Wednesday. However, in afternoon trade Lufthansa retreated to trade at 7.9 percent.

And Swedish Telecom operator Tele2 B shares rallied 3.3 percent after reporting third-quarter core profit that beat market expectations.

Elsewhere, oil prices pulled back in the European trading session after a rally in the U.S. dollar weighed on commodity prices denominated in the greenback. Brent traded down 2.2 percent while U.S. WTI fell 1.98 percent.

—CNBC's Gemma Acton contributed to this article.

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