The European retail sector jumped 0.8%, the most among the main sub-sectors, powered by a 2.7% gain in Casino after the debt-laden French retailer said it was in talks to sell its discount store chain Leader Price to German rival Aldi.
The healthcare, utilities, real-estate and food and beverage sectors - commonly considered defensive - posted some of the biggest gains.
The pan-European STOXX 600 index rose 0.1%, with London's FTSE 100 underperforming.
The FTSE lagged its regional peers as British exporters were hurt by a rally in the pound after European Commission President Jean-Claude Juncker raised hopes of Britain exiting the European Union with a deal.
Also helping sentiment was China's move to cut its new one-year benchmark lending rate for the second straight month, as it sought to guide interest rates lower for an economy hit by the U.S.-China trade war.