European shares rose for a second straight session on Thursday, boosted by financial and energy stocks, as investors cheered improving consumer sentiment in the United States after inflation expectations eased.
The region-wide STOXX 600 index (.STOXX) was up 0.4% at a one-week high, taking cues from an upbeat session on Wall Street overnight.
The U.S. main stock indexes logged their biggest daily gains so far this month on Wednesday, helped by a reading which showed domestic consumer confidence rose to an eight-month high in December as inflation retreated and the labour market remained strong. European shares also posted strong gains in the previous session, as improving consumer sentiment in the eurozone eased some fears about an economic downturn which had been heightened by hawkish messages by major central banks last week.
"What we're seeing is a recovery in risk appetite after a fairly negative set of central bank meetings for equities," said Adam Hoyes, markets economist at Capital Economics.
Markets are seeing an uplift as the festive mood kicks in ahead of the end of an year which has seen equities take a massive hit due to fears of a steep economic recession from aggressive monetary policy tightening by central banks.
Traders and analysts have also pointed to thin trading volumes ahead of the holidays influencing market moves.
Among sectoral indexes on Thursday, energy stocks (.SXEP) jumped 1.2% to spearhead gains, as they tracked oil prices higher. .
Banks (.SX7P) rose 0.7%, hitting their highest since March, boosted by shares of Denmark's Jyske Bank (JYSK.CO) and Danske Bank (DANSKE.CO) after local peer Sydbank (SYDB.CO) upgraded its full-year net income outlook.
Euro zone bond yields struggled for direction on Thursday as investors took stock of a surge in borrowing costs in the wake of last week's European Central Bank (ECB) meeting.
