European markets rose Thursday as investor confidence was lifted by hopes that China will announce stimulus measures to boost the economic condition and regain the growth momentum.

The French CAC 40 index advanced 0.50 percent or 17.13 points to 3455.39. Shares of AXA SA climbed 1.54 percent and those of Vinci SA rose 0.97 percent.

London's FTSE 100 index was up 0.14 percent or 8.05 points to 5853.97. Shares of ITV PLC rose 1.24 percent and shares of Aggreko PLC were up 0.99 percent.

The German DAX 30 index marginally rose 0.06 percent or 4.10 points to 6970.25. Shares of Deutsche Bank AG climbed 1.06 percent and those of Allianz SE advanced 0.51 percent.

Spain's IBEX 35 was up 1.08 percent or 77.20 points to 7227.40. Shares of Bankia SA advanced 16.17 percent and those of Acerinox SA rose 1.53 percent.

Market sentiment turned positive to note that the rate of inflation in China slowed down in July from the previous month, showing signs of a gradual decline in price pressure to make room for monetary easing. Data from the National Bureau of Statistics show that the consumer price index of China rose 1.8 percent in July from a year earlier, down from 2.2 percent in June.

The diminishing inflation should be good news because it can help the Chinese government invigorate growth without much concern about the rising prices.

Meanwhile, the Bank of Japan concluded its two-day monetary policy meeting August 8 and 9 and decided to leave the present monetary policy settings unchanged. The BoJ sees that the trend of economic conditions as only picking up, suggesting that the monetary policy stance is still skewed to dovish side.

However, investors could return to a cautious mode since monetary policy decisions by the central banks would put more weights on risk scenarios rather than the main outlook. "Generally speaking, when the fiscal policy authority (i.e. government) is having difficulty in delivering policies, there is a rising expectation for central bank as it can act much quicker. However, as suggested by the decision to stay put in the policy meeting on 2 August, the ECB is very cautious against taking monetary stimulus unless inter-governmental progress is guaranteed," said Credit Agricole in a note.