By Ankika Biswas and Pranav Kashyap
(Reuters) -Europe's benchmark stock index recouped early losses to close slightly higher on Thursday, helped by encouraging U.S. jobs market data and as the heavy-weight healthcare sector got a boost from Novo Nordisk (NYSE:NVO)'s recovery.
The STOXX 600 closed 0.1% higher, after a sharp early decline in technology stocks knocked the pan-European index down over 1% intraday.
Data showed weekly U.S. jobless claims fell more than expected, suggesting fears of a sharp weakening in the labour market, which in part had fuelled U.S. recession fears, were overblown.
"Just because the labour market is cooling off doesn't mean we're (U.S.) entering into a recession. While there has been renewed worry about the labour market, we believe it's overblown," said from Skyler Weinand, chief investment officer, Regan Capital.
As European stocks recovered after the data, Wall Street also enjoyed strong gains for the day.
The STOXX 600 has been volatile this week as investors evaluated fears of a potential U.S. recession and looked for clear macroeconomic signals, both at home and globally.
German inflation data, due on Friday, will give investors a clearer picture on Europe's largest economy as it teeters on the verge of a recession.
Europe's largest company by market value, Novo Nordisk, rose 4.3%, recovering more than half of Wednesday's near 7% slide, as rival Eli Lilly (NYSE:LLY)'s raised its annual sales forecast, boding well for the Danish drug maker.
Healthcare was among the top sectoral gainers, also boosted by a 8.3% jump in British drugmaker Hikma Pharmaceuticals (OTC:HKMPY) on an upbeat annual outlook, while media was the worst hit sector.
Allianz (ETR:ALVG) gained 2% after the German insurer posted a better-than-expected rise in second-quarter net profit and said it was on track to meet its full-year target.
Several other European insurers recorded bumper first-half profits on Thursday, such as Zurich Insurance, Munich Re and London's Beazley.
Siemens rose 2.1% after beating quarterly earnings forecasts.
Deutsche Telekom (OTC:DTEGY) was up 1.9% after the telecom firm reported a 7.8% increase in its second-quarter core earnings, while Entain climbed 5% as the British gambling group raised its annual revenue forecast.
Meanwhile, valve maker Spirax-Sarco Engineering dropped 7.4% after results, while German sportswear maker Puma fell 4% as a raft of brokerage price-target cuts followed Wednesday's dismal earnings.