By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets rallied to a two-month high on Thursday, boosted by upbeat global manufacturing data and dovish statements from central banks. Solid moves for banks after well-received earnings reports also helped sentiment.

The Stoxx Europe 600 index climbed 1.2% to close at 303.29, after closing out July with the biggest monthly gain since October 2011 on Wednesday.

Banks posted some of the biggest gains in the index, with Société Générale SA climbing 10% after saying profit more than doubled in the second quarter and confirming its outlook for the next two years.

Shares of Lloyds Banking Group PLC (LYG) rallied 8.1% after the bank said it swung to a profit in the first half of the year from a loss in the same period last year.

Shares of Danske Bank AS jumped 9.3% after the Danish firm posted a bigger-than-expected rise in second-quarter net profit.

On a more downbeat note, Royal Dutch Shell PLC (RDSB) slid 4.4% after the oil giant posted a 60% drop in profit for the second quarter, largely due to a write-down on its shale assets in North America.

Central banks in focus

More broadly, investors in Europe digested a raft of events, including dovish central-bank statements in Europe and the U.S., Chinese and European manufacturing data and strong U.S. numbers.

"It's a day where good news is actually good news for the market and I think it's following on from yesterday where we had strong economic news followed by a dovish statement from the Fed. Today we had more strong economic data followed by a typical ambiguous press conference from [ECB boss] Mario Draghi," said Guy Foster, head of portfolio strategy at Brewin Dolphin.

Late on Wednesday, the U.S. Federal Reserve said it would leave its asset purchases unchanged at $85 billion a month. The central bank said in a statement that the economy is expanding at a "modest" pace, a change from the "moderate" pace seen in June, with many analysts interpreting the changes as mainly dovish.

On Thursday, the European Central Bank was ready with its policy decision and left its key lending rate at 0.5% as expected. ECB President Mario Draghi said at the following news conference that although data "tentatively confirm" stabilization of economic activity at "low levels", rates will remain low for an extended period. Read: Live blog of ECB President Mario Draghi's news conference

"The news coming out of the euro zone has been a lot stronger lately and the biggest fear was that something hawkish would come out of the [ECB] news conference," Foster said.

"But now you have this Goldilocks scenario where there's good news on growth and nothing to suggest that central banks are hawkish," he added.

In the U.K., the Bank of England also left monetary policy unchanged, with the key lending rate remaining at a record low of 0.5%, where it has stood since March 2009.

Among upbeat data news on Thursday, the euro-zone manufacturing PMI rose to a two-year high, the U.K.'s manufacturing PMI surged to a 28-month high, U.S. jobless claims dropped more than expected and the U.S. ISM index rose to the highest level since June 2011.

U.S. stocks traded higher on Wall Street.

The U.K.'s FTSE 100 index closed 0.9% higher at 6,681.98. Germany's DAX 30 index picked up 1.6% to 8,410.73, while France's CAC 40 index rose 1.3% to 4,042.73.

Upbeat China data

The markets were further buoyed by the official China Purchasing Managers' Index, registering a surprise gain for July, rising to 50.3 from 50.1 the previous month. A reading above 50 indicates expansion.

A separate PMI reading by HSBC and Markit released 45 minutes later differed, however, saying Chinese manufacturing activity was contracting, with the index dropping to an 11-month low.

But resource firms, which tend to rise on positive growth indications from China, seemed to focus on the upbeat official reading. Shares of Rio Tinto PLC (RIO) climbed 2.8% and BHP Billiton PLC (BHP) rose 2.2%. Metals prices were mostly higher.

Movers

Among other notable movers in Europe, German retailer Metro AG rallied 8.5% after swinging to a second-quarter profit of EUR33 million after a loss of EUR18 million a year earlier.

On more downbeat note, BMW AG slipped 0.8% after the car maker said second-quarter earnings before interest and taxes decreased 8.8%.

Shares of ArcelorMittal SA shaved off 3.7% in Paris after the steelmaker revised its full-year earnings outlook lower and posted a fourth consecutive quarterly net loss due to lower steel prices and restructuring charges.

Shares of Sanofi SA (SNY) slid 4.1% after the drug maker lowered its earnings outlook for 2013 and reported a plunge in second-quarter profit.

Outside the major indexes, shares of Neste Oil Oyj surged 24% after the Finnish oil-refining firm reported second-quarter profit of 90 million euro ($119 million) from a loss of EUR112 million in the same period last year.

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