European shares resumed a rally on Thursday after a brief dip the previous day, with investors awaiting a rate decision and comments from the European Central Bank after the Bank of England kept interest rates on hold at a record low.
By 1101 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.4 percent at 1,122.62 points. The index has risen for the last eight out of nine sessions, resulting in a 4.4 percent gain over the period.
Following the Bank of England's decision to keep interest rates at 0.5 percent, the focus turns to the European Central Bank (ECB), which will announce its decision at 1145 GMT.
The market is pricing in a quarter-point interest rate rise in the ECB's benchmark rate to 1.50 percent, and will closely monitor comments from the central bank's President Jean-Claude Trichet at a news conference at 1230 GMT for any rate outlook for the rest of the year.
"Much of it (rate hike expectations) has been priced-in considering Trichet used the words "strong vigilance" which normally means an imminent rate hike in the next meeting. It will be interesting to see if there are any deviations from expectations," said Joshua Raymond, market strategist at City Index.
Reflecting a modest rise in risk appetite, the Euro STOXX 50 volatility index , one of Europe's main gauges of investor anxiety, fell 1 percent.
The lower the volatility index, based on sell and buy options on the Euro STOXX 50 index, the higher the market's risk appetite.
Mining shares were among the heavyweight gainers, with the STOXX Europe 600 basic resources index up 1.6 percent, rising in tandem with copper prices which hit a two-month high on supply disruptions.
Other gainers include Solvay which rose 3.1 percent, lifted by a UBS rating hike to "buy" with a target price increase to 130 euros from 88 euros.
Man Group added 2.8 percent as it saw a stronger than expected influx of client cash over the past three months, leading Evolution Securities to repeat its "buy" rating on the stock.
On the downside, German steelmaker ThyssenKrupp fell 5.4 percent on the back of its 1.7 billion euro share sale.
Highlighting ongoing concerns about peripheral euro zone debt, Spain had to draw in investors with high levels of interest for a bond auction on Thursday despite strong demand.
Meanwhile, the cost of insuring Portuguese debt against default hit a record high on mounting concerns about its debt situation after Moody's downgraded the country's credit rating to junk earlier this week.
Later in the session, investors will focus on the ADP national employment report at 1215 GMT, which comes ahead of Friday's closely-watched non-farm payrolls data.
ADP figures are expected to show U.S. private hiring increased 68,000 in June after 38,000 in May.
"The ADP will be used to predict what non-farm payrolls could be tomorrow. The market could turn more sensitive to any economic data that comes out," City Index's Raymond said.
(Editing by Elaine Hardcastle)