Euro zone blue chips <.STOXX50E> gained 0.6 percent and the pan-European STOXX 600 <.STOXX> index closed up 0.5 percent while trading volumes were slightly up from the previous session despite new financial regulations kicking in.

A greenback rally triggered by upbeat U.S. manufacturing and construction data ahead of the release of the Federal Reserve's December policy meeting minutes helped blue chips in France and in Germany.

Frankfurt's DAX <.GDAXI> and Paris' CAC 40 <.FCHI> both jumped 0.9 percent.

"It's a recovery session", said Pierre Martin, a senior sales at Saxo Bank, noting that apart from the favourable currency effect, oil prices gave a boost to energy stocks and that other sectors, such as retail, industrials, healthcare or technology, had also supported indexes.

Shares in British retailer Next (>> Next) rose 6.7 percent after it raised profit guidance on better than expected Christmas sales.

Next is the first major listed retailer to give an update on Christmas trading, but its optimistic update lifted other retailers such as Ocado (>> Ocado Group PLC), up 7.7 percent or Primark owner Associated British Foods (>> Associated British Foods), up 2.1 percent.

"As much as (Next's) update is good news, the constant update-by-update tinkering of guidance and sharp reactions by the share price just goes to show how shareholders are at the mercy of UK consumer trends and whims," said Mike van Dulken, head of research at Accendo Markets.

"The retail sector is a very tricky one."

Europe's retail index <.SXRP>, one of the major underperformers of 2017, was up 0.7 percent.

Europe's energy sector <.SXEP> built on the previous sessions' gains with a 1.25 percent advance, helped by firmer oil prices which rose to the highest in 2-1/2 years as unrest continued in OPEC member Iran.

For a graphic on European sectors, click - http://reut.rs/2CLe1ur

(Reporting by Kit Rees; Editing by David Goodman and Richard Balmforth)

By Kit Rees and Julien Ponthus