European stock markets moved higher on Thursday, buoyed by Federal Reserve Governor Christopher Waller's latest comments, which prompted traders to scale back expectations for an imminent U.S. interest rate hike. The region-wide Stoxx Europe 600 index closed up 0.5%, with the telecommunications sector among the standout performers after activist investor Elliott Investment Management reportedly built a substantial stake in Germany's telecom giant.

Waller indicated that his upcoming policy decision would hinge significantly on the August inflation data scheduled for release next week. Following his remarks, market pricing for a rate increase at the Fed's meeting later this month dropped to roughly 50%, down from the approximately 60% probability that had been factored in on Wednesday.

Meanwhile, investors remained focused on geopolitical tensions, particularly concerning the U.S. and Iran. President Donald Trump stated earlier that any renewed military action against Iran would likely be brief, reiterating that the U.S. maintains control over the strategic Strait of Hormuz.

Sector-wise, media and automotive stocks led the gains, while consumer goods shares underperformed. French chip materials company Soitec surged 10% after raising its revenue guidance for the second quarter of fiscal 2027. In the telecom space, Deutsche Telekom rose 1.1%, outpacing the broader market.