Europe Shares Close Higher After Two-Day Rally

European shares closed higher on Wednesday afternoon, as relief rallies in Europe and the U.S. continued after the Chinese central bank offered some reassurance about liquidity crunch concerns.

The pan-European FTSEurofirst 300 Index closed provisionally up 1.7 percent at 1,149.33 points, with positive momentum continuing after stellar gains on Tuesday. Upward momentum on Wall Street also boosted European shares, despite economic data that showed U.S. GDP growth was weaker in the first quarter than expected.

(Read More: US First-Quarter GDP Gets a Haircut, Rises 1.8%)

Meanwhile, in Germany, a forward-looking consumer sentiment indicator showed morale was at its highest level in nearly six years. The index came in at 6.8 for July, above expectations for 6.5, and up on June. The German Dax closed provisionally 1.6 percent higher.

(Read More: German Consumer Sentiment Highest in Almost 6 Years)


In stocks news, every sector posted gains on Wednesday except for basic resources stocks, which lagged due to their heavy exposure to China.

Shares of Stagecoach closed around 3.3 percent higher, after the transport firm announced a rise in profit. And Afren shares jumped more than 7.5 percent after the oil and gas company said it had made a significant oil discovery off the shores of Nigeria.

Shares of broker ICAP tumbled around 8.6 percent on Tuesday, after it received a downgrade to "hold" from "buy" from Societe Generale.