The pan-European STOXX 600 rose nearly 1% to close at a record high, beating its previous peak in January 2022.

A 3.0% jump in technology shares drove gains with artificial intelligence bellwether Nvidia soaring 15.0% on Wall Street after reporting results post Wednesday's closing bell.

Dutch chipmaking equipment supplier BESI semiconductor also hit a record high with a 4.9% rise after exceeding fourth-quarter targets on demand for AI-related chipmaking parts.

The technology index is up 12.4% so far this year and trading at more than 23-year highs on the back of upbeat earnings from industry leaders SAP and ASML Holding which have also received a boost from the AI frenzy.

"Companies around the world are exploring ways to use AI to automate simple tasks or to make them easier to complete. These small efficiency gains can make a huge difference across a large business and so it's an easy investment decision to make," said Russ Mould, investment director at AJ Bell.

Boosting sentiment further, ECB policymakers agreed last month that inflation is coming under control although any talk of rate cuts was premature given rapid wage growth and abundant underlying price pressures, published accounts of their meeting showed.

On the data front, euro zone business activity improved in February as the dominant services sector broke a six-month streak of contraction, offsetting a deterioration in manufacturing, a survey showed.

Bucking the trend, the food and beverages index dropped 1.3%, weighed down by losses in Nestle after the world's biggest packaged food company reported full-year organic sales growth slightly below expectations as price hikes prompted some shoppers to turn to competing brands.

Food delivery firm Delivery Hero fell 3.4% after it said talks for the potential sale of its foodpanda business in selected markets in Southeast Asia had been terminated.

Mercedes-Benz advanced 4.7% as the luxury automaker reported a 'solid' set of full-year results and announced a share buyback program of up to 3 billion euros ($3.26 billion).

UK pharmaceuticals firm Indivior led gains on the STOXX 600, jumping 22.4% after forecasting annual revenue above estimates.

Shares in Accor rose 6.6% following a bigger-than-expected jump in Europe's biggest hotel group's annual core profit, and an upbeat forecast for 2024.

(Reporting by Khushi Singh, Johann M Cherian and Shubham Batra in Bengaluru; Editing by Sherry Jacob-Phillips and Varun H K, Kirsten Donovan)

By Khushi Singh and Shubham Batra