European Shares Close Higher on US Boost

European shares closed higher on Thursday, getting a fresh boost from stronger-than-expected U.S. housing data.

European Markets


Contracts to buy previously owned U.S. homes rose more than expected in October, a sign the housing market recovery advanced into the fourth quarter despite a mammoth storm and concerns over looming tax hikes.

The FTSEurofirst 300 index provisionally closed up 1.1 percent to 1,121.32 points.

The STOXX 600 European basic resources sector, which includes mining stocks, was the top-performing European equity sector, while the STOXX 600 European bank sector also rose.

Rio Tinto, the world's no. 2 iron ore producer, said on Thursday that it plans to make $7 billion worth of cuts to operating costs, including a $2 billion cut in exploration operations. In its attempts to find savings, the company said it would step up iron ore output. Shares in the firm rose and closed 5 percent higher.

The announcement by Rio Tinto came as fellow global miner, BHP Billiton, cautioned that the global economic crisis is expected to continue and no near-term rise is expected in prices for iron ore and metallurgical coal, two of the mining company's biggest revenue-generating commodities. Despite this shares in the firm were also higher.

European traders also remained firmly focused on the U.S. and the looming "fiscal cliff".

(Read More: What is the "Fiscal Cliff")

In earnings, U.K.-based retail firm Dixons released first-half earnings highlighting a 79.5 million pound ($ million) loss before tax, although this was roughly in line with forecasts; shares edged lower in Thursday trading.

Shares in Zurich Insurance were higher after the company announced its growth targets for the year which signaled that its cost cutting measures were on track.

In Italy, shares in Unicredit were in focus after reports emerged that the German unit of the bank was raided by prosecutors for possible tax evasion reasons.

French telecommunications company Vivendi announced this week that it was planning to cut 850 jobs. The firm's CEO Stepane Roussel also spoke out on Wednesday saying the SFR unit of the company was not for sale.

Invensys was the major gainer across European markets after reports that Siemens has acquired the rail unit of the business; shares were over 12 percent higher.

The biggest faller on the FTSE 100 Index was the John Wood Group . The stock closed down 4.3 percent.

Credit Suisse announced on Thursday that it was placing 16.4 million shares in the firm on behalf of the Wood Family Trust; shares in the oil services firm fell over 4 percent.

Reuters contributed to this report