European shares recovered losses to turn, while bunds hit session lows on Thursday, with upbeat U.S. economic data and news that Greece and its international lenders have agreed on budget cuts worth 325 million euros improving sentiment.

At 3:39 p.m., the FTSEurofirst 300 <.FTEU3> index of top European shares was flat at 1,076.13 points after falling to a low of 1,064.64.

The German Bund future sank to a session low of 138.83, down 26 ticks on the day.

European media shares <.SXMP>, up 1.2 percent, were the top gainers, helped by a more than 3 percent rise in Anglo-Dutch publishing and events group Reed Elsevier that reported a rise in full-year profit.

Data showed U.S. jobless claims unexpectedly fell last week to a near four-year low, while January housing starts were also better than forecast. The pace of factory activity in the U.S. Mid-Atlantic region gained momentum in February as new orders picked up.

Greek government sources said Greece and its international lenders had agreed how to achieve budget cut measures worth 325 million euros for this year, one of the last pieces that needed to fall into place for the debt-laden country to receive a 130-billion euro rescue package.

(Reporting by Atul Prakash)