European equities hit a two-week closing high on Thursday on reports that the European Central Bank had bought eurozone bonds and as data showed and unexpected surge in US home sales in October. The FTSEurofirst 300 index of top European shares finished 1.6 percent stronger at 1,106.18 points, the highest close since November 18. The session witnessed a choppy trade, with the index moving in a broad range of 1,086.95-1,107.25.
The benchmark turned negative after ECB president Jean-Claude Trichet disappointed investors by not announcing an aggressive bond-buying programme, but the market got support after traders said the ECB was buying Portuguese and Irish sovereign bonds at a modestly higher rate than usual. Shares in automobile and auto parts featured among the top gainers after data showed US auto sales rose a stronger than expected 17 percent in November. Volkswagen, Porsche and Renault rose 3.8 to 5.1 percent.
The VDAX-NEW volatility index showed the appetite for risky assets rose, with the index falling 7 percent. The lower the index, the higher the market's desire to take risk. Sharp gains in share prices since Wednesday improved the market's technical outlook. The Euro STOXX 50, the euro zone's blue chip index, rose 2 percent to 2,781.39 points.
The index moved back above its 50-day moving average and the 50-percent Fibonacci retracement of a fall from a high in April to a low in May - generally a positive signal. But the index faces strong resistance at 2,806, its 61.8 percent retracement. Banks were also in demand, with the STOXX Europe 600 banking index rising 2.6 percent. Banco Santander, BBVA and Societe Generale rose 4.2-5.1 percent.