European Stocks Rally on Strong Bank Earnings and Easing Trade Tensions

European stocks closed higher as ECB held interest rates steady. Major banks reported strong earnings, easing concerns over trade tensions with the U.S. The pan-European STOXX 600 reached a six-week high, buoyed by potential trade deals and solid corporate results, especially in banking and consumer goods sectors.

European stocks surged on Thursday following the European Central Bank's decision to maintain current interest rates, avoiding surprises for the market. This steadiness came amid positive earnings reports from major banks and a hopeful outlook on U.S.-EU trade relations.

The STOXX 600 index closed up 0.2%, briefly hitting a six-week high. Although stocks pulled back slightly, investor sentiment remained optimistic as ECB chiefs, including President Christine Lagarde, highlighted trade conditions' potential impact over monetary policy shifts.

Strong second-quarter results boosted major banks like Deutsche Bank and BNP Paribas, which saw significant stock increases. Meanwhile, retail sector leaders like Reckitt experienced soaring share prices, driven by raised revenue forecasts, showcasing overall robust performance across various sectors.

(With inputs from agencies.)