Europe close: Stocks finish at session highs ahead of key EU leaders meeting

Shares in Europe finished higher on Thursday and near their best levels of the session, as investors looked past a horribly weak reading on the euro area's services sector ahead of a meeting of European Union leaders scheduled for later in the day.

"If you had told an investor on 1 January that, within a few months, global PMIs would dive to a fraction of their previous level, they would have thought you mad," said IG chief market analyst Chris Beauchamp.

"What is equally confusing perhaps is the way markets seem to have taken today’s incredible readings in their stride, or at least in a relatively calm fashion."

Against that backdrop, by the end of trading, the pan-European Stoxx 600 was 0.94% higher to 333.24, alongside a 0.95% rise on the German Dax to 10,513.79 while the FTSE Mibtel added 1.47% to 17,011.11.

Significantly, front month Brent crude oil futures extended their bounce by 6.94% to trade at $21.90 a barrel on the ICE, although euro/dollar ended down by 0.43% at 1.0777.

In another positive development, Italian 10-year debt traded on the front foot, pushing yields down by 11 basis points to 1.99%.

Earlier, IHS Markit's services sector Purchasing Managers' Index for the euro area slumped again, falling from an already record weak reading of 34.5 for March to 12.3 in April (consensus: 27.8).

On the pandemic front, some analysts called attention to the latest available figures revealing a small increase in the numbers of daily new infections in Italy and Spain, saying they merited close watching.

Nevertheless, in the case of Spain at least officials in Madrid explained that the recent stubborness in the number of new infections was the result of much higher testing recently, which had in fact revealed a smaller than anticipated rise in the overall tally of those diagnosed with the new coronavirus.

Later on Thursday, EU leaders will try and reach an agreement around a European Commission proposal for a €2.0trn economic recovery plan.