The pan-European Stoxx 600 ended provisionally up 0.68 percent, with all sectors, except travel and health care, posting solid gains by the finish.
The U.K.'s FTSE 100 jumped 0.49 percent by the close, despite an uptick in sterling, while France's CAC 40 soared 1.14 percent and Germany's DAX rose 0.93 percent. Most markets in peripheral Europe closed higher.
In banks, Danske Bank rose close to the top of the STOXX 600 after UBS said the Danish lender's shares were still appealing from a valuation perspective, despite a money laundering scandal surrounding its Estonian branch. Denmark's financial watchdog, the Financial Services Authority, said Thursday it was reopening an investigation into the bank, whose CEO resigned on Wednesday. Nevertheless, shares rose more than 4 percent.
At the other end of the pan-European index, IG Group slumped to the bottom of the Stoxx 600, off more than 7 percent, after the trading firm posted earnings. The group said first-quarter revenue had fallen by 4.7 percent, hit by a drop in market volatility and client activity.
Meantime Casino fell over 5.5 percent after Goldman Sachs slashed its target price on the retailer. Fellow retailer Zalando also tumbled 3.4 percent after UBS cut its target price on the stock.
In corporate news, Ryanair shareholders re-elected Chairman David Bonderman and Chief Executive Michael O'Leary to the company's board. However, support fell for the two executives, after the budget carrier faced industrial action that disrupted flights. O'Leary, 57, said he was reluctant to commit to signing up for a five-year contract due to his age. Shares fell 1 percent.
And the U.K.'s Takeover Panel on Thursday said that a $35 billion takeover battle for British broadcaster Sky would go to an auction on Saturday if the competitive situation remains unchanged. The media bidding war pits Twenty-First Century Fox against Comcast, and could see Disney gain control of Sky if Fox emerges victorious.
Trade war, Brexit in focus
Despite the trade spat escalating, U.S. stocks surged at the start of Thursday's trade, with the Dow notching its first record high since January. Sentiment on Wall Street was boosted as investors bet that a trade war between the U.S. and China will not be as bad as previously feared. Asian markets were more cautious, however, trading mixed on Thursday with Chinese mainland markets lower.
Trade tensions are rippling through the business sector. Jack Ma, founder of Chinese retail giant Alibaba, has recanted his promise to Donald Trump to create 1 million U.S. jobs. "The promise was made on the premise of friendly US-China partnership and rational trade relations," Ma said to Chinese news site Xinhua. "That premise no longer exists today, so our promise cannot be fulfilled."
In Europe, attention will be focused on an informal summit of European Union leaders in Austria on Thursday. Brexit and immigration are set to be the main points of discussion. U.K. Prime Minister Theresa May, under pressure at home and abroad to achieve a workable Brexit deal, has called for "goodwill" and flexibility from her EU counterparts. The future of the Irish/Northern Irish border remains a stumbling block in talks.
U.K. retail sales jumped 3.3 percent last month compared to August 2017, data showed Thursday, beating analyst expectations. Sterling jumped almost 0.7 percent to $1.323, lifted by the sales numbers and optimism over Brexit.
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.