Frankfurt DAX: 2820.75 (+5.62)

Wall Street's revival helped German shares make a firm start as did a firmer dollar and weaker-than-expected German money supply data. But gains were more limited later. The Bundesbank said growth in its main monetary policy indicator, M3 money supply, slowed to an annualised rate of 8 per cent in November from 8.4 per cent in October.

Paris CAC-40: 2218.89 (+25.19)

French shares closed higher, supported by strength on Wall Street, and traders were moderately hopeful about further progress. Shares in luxury goods group LVMH soared 8.37 per cent to 1,375 francs after a US arbitrator cleared its bid to buy duty free chain DFS.

"If New York finishes higher, if the dollar holds steady at around 5.25 francs and rates stay steady, we have the grounds to move a bit higher," said one dealer.

Milan Mibtel: 10406 (+113)

Italian shares ended over 1 per cent higher, driven by the firmer market on Wall Street.