Solid reports from large-cap companies including Renault (>> Renault) and EDF (>> Electricité de France) lifted the STOXX 600 <.STOXX> index 1.1 percent.

The pan-European benchmark is up 3.3 percent this week, its best since December 2016, but still down less than 6 percent from the 2 1/2-year peak it reached in January.

Among country benchmarks, the UK's FTSE <.FTSE> was up 0.8 percent, as was Germany's DAX <.GDAXI>. Italy's FTSE MIB <.FTMIB> outperformed, rising 1.3 percent.

This week's recovery follows a turbulent start to February, when worries that rising U.S. inflation would trigger faster increases in interest rates caused equities to sell off globally.

The euro zone's volatility index <.V2TX> dipped and remained below the 19-month peak it reached earlier this month.

"The reason for the change in sentiment may well be down to the fact that the overall global economic picture continues to remain fairly positive," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.

According to Thomson Reuters data, European fourth-quarter earnings are expected to rise 14.6 percent, an upwards revision from last week's forecast of 11 percent and following 15 weeks characterised by a string of downgrades.

That brought Europe to just below the 14.8 percent growth rate expected for the S&P 500, though earnings beats in the U.S. stand at 78 percent versus 50 percent in Europe.

On the day, the biggest gainer in Europe was Vopak (>> Royal Vopak), up 13.7 percent after earnings at the Dutch oil and chemical storage firm fell less than expected.

EDF (>> Electricité de France) shares rose about 4.6 percent on a higher-than-expected dividend and expectations of a rebound in 2018, despite a slide in core 2017 earnings and a muted outlook for nuclear power production next year.

French satellite operator Eutelsat (>> Eutelsat Communications) soared 12.2 percent following its update. Even though its first-half core profit fell 7.4 percent, one trader said net profit beat expectations and cost-cutting surprised positively.

Air France fell the most, 6.3 percent. Its shares reversed course after the airline's positive comments on pricing.

Vivendi (>> Vivendi) shares dropped 6 percent as the French media conglomerate disappointed investors by failing to offer full guidance for 2018.

(Reporting by Danilo Masoni,; editing by Larry King)

By Danilo Masoni