European shares ended higher on Thursday, boosted by short covering ahead of a speech from US President Barack Obama about his plan for jobs growth to help the struggling US economy. Expectations Obama's $300 billion plan will include tax cuts for the middle class and businesses and new spending to repair infrastructure, and US Federal Reserve Chairman Ben Bernanke's comment on economic outlook could surprise on the positive side prompted investors to buy riskier assets.
Obama was scheduled to speak at 2300 GMT, while Bernanke's speech was set for 1730 GMT. There will also be a focus on a meeting of finance ministers and central bankers from the Group of Seven (G7) economic powers in France on Friday. "The debate has now moved on to the potential policy response that we could see and with Obama's speech tonight, Bernanke speaking this afternoon and a G7 meeting on Friday, you have started to line up the catalysts which could respond to some of the economic concerns," said Ian Richards, European equity strategist at RBS.
The FTSEurofirst 300 index of top European shares closed 0.9 percent higher at 939.63 after choppy trade that saw it move in a 926.38-942.34 range. Energy shares headed the gainers' list, with the European sector index rising 2.2 percent, tracking crude oil which rose after a government report showed crude stocks fell more than expected last week in the United States.
Credit Suisse said while oil majors had derated and were cheap in absolute terms, trading at around 6.8 times estimated 2011 earnings, their relative valuation was not attractive enough to justify broad-based buying of the sector. British group Wm Morrison Supermarkets , up 4.2 percent on better-than-expected first-half profit, led retailers higher, with the sector index up 1.8 percent.
European Central Bank President Jean-Claude Trichet said there were "intensified downside risks" to the economic outlook for the 17-country eurozone, marking a significant change in stance from last month when the bank was focused on inflation risks. The ECB kept rates unchanged.