Europe close: Stocks move higher on hopes for ceasefire in Ukraine

European stocks jumped as Russia and Ukraine agreed on steps to resolve the conflict between the two countries.

European stocks jumped as Russia and Ukraine agreed on steps to resolve the conflict between the two countries.

Ukrainian President Petro Poroshenko said both nations have "reached a mutual understanding on the steps that will facilitate the establishment of peace".

Stocks with exposure to Russia rallied following the reports including Nokian Renkaat Oyj, Raiffeisen Bank International AG and Carlsberg A/S.

In another lift to stocks, speculation was rising that the European Central Bank (ECB) will introduce further stimulus measures at its Thursday meeting.

ECB President Mario Draghi has hinted at the possibility of full-on quantitative easing to address weak inflation and a stagnant recovery.

Ahead of the meeting, a report on Eurozone retail sales showed a year-on-year 0.8% rise in July, easing back from June's 1.9%. Analysts had predicted a 0.9% gain.

A final reading on the Eurozone purchasing managers' index (PMI) composite was released by Markit. The composite, which gauges services and manufacturing activity, was revised lower to 52.5 in August from an initial 52.8. Eurozone services PMI was also revised down to 53.1 from 53.5. Analysts had expected the data to remain unchanged. A reading above 50 signals expansion.

Another report revealed that China's composite PMI rose to 52.8 in August from 50.5 a month earlier. Separately the non-manufacturing PMI increased to 54.4 in August from 54.2 in July.

Japan's composite PMI, on the other hand, fell to 49.9 in August from 50.4 the prior month, signalling a contraction. The services PMI rose to 50.8 in August from 50.2 in July.

Ashtead, Hermes

Ashtead Group gained after saying full-year results will be higher than previously forecast.

Hermes International dropped after LVMH Moet Hennessy Louis Vuitton SA said it will distribute its holding in the company to its own shareholders.

Danone advanced as the yogurt maker appointed Emmanuel Faber as chief executive.

ING Groep NV edged higher as the Dutch financial-services company said it will sell $1.18bn in shares.

The euro rose 0.05% to $1.3139.

Brent crude futures rose 1.6% to $102.02 per barrel, according to the ICE.