Europe Stocks End Slightly Higher, Banks Gain

European shares ended slightly higher on Thursday, led by gains in financials after two key rate decisions came in as expected, but investors worried that inflation would deter future easing by central banks.

The European Central Bank kept rates steady, as expected, but flagged concerns over prices, and the Bank of England cut rates by 25 basis points, also as widely expected.

The FTSEurofirst 300 ended 0.08 percent higher at 1,527.72 points, with banks the top gainers. BNP Paribas rose 1.5 percent, Societe Generale rose 2.6 percent and Royal Bank of Scotland 2.7 percent.

But drugmakers fell, led by Roche, which slipped 3.2 percent as analysts cut forecasts for the Swiss group following a rejection of its key Avastin drug by a U.S. regulatory panel.

Analysts said the ECB's comments did not point to equities-friendly rate cuts in the near future.

"The ECB are clearly worried about upside inflation risks and only seem to be paying notional lip service to market risks and the impact they may have on future growth," Bear Stearns said in a note.

"This bears all the hallmarks of an ECB which remains firmly sitting on the fence and absolutely stuck in wait-and-see mode."