2017.09.2121:01:00UTC+00European Markets Gain after Fed Signals December Rate Hike

European markets finished higher on Thursday after the Federal Reserve announced a plan to begin unwinding its balance sheet and hinted at one more interest rate rise for this year.

The pan-European Stoxx 600 rose 0.24 percent, with most sectors and major bourses in the green. The Euro Stoxx 50 index of eurozone bluechip stocks rose 0.41 percent, while the Stoxx Europe 50 index, which includes some major U.K. firms, gained 0.42 percent.

The banking index led advances on Thursday, climbing 1.5 percent, amid reports of a possible merger.

The German government is reported to be in favor of a merger between state-backed Commerzbank and France's BNP Paribas, according to German weekly WirtschaftsWoche, citing financial sources. Shares of Commerzbank jumped over three percent and BNP Paribas gained one percent on the news report.

According to a report from Reuters, Italy's UniCredit has also made early approaches to authorities in Germany in order to sound-out support for a merger with Commerzbank. Shares of UniCredit were up 2.40 percent in Milan.

Basic resources stocks fell following the earthquake in Mexico which weighed on mining stocks. Precious metal miner Fresnillo, which is headquartered in Mexico, dropped 2.2 percent. The company wrote in a statement that its offices were unaffected by the quake.

Ailing British outsourcing giant Capita posted its underlying revenue in the first six months of the year, which had declined three percent as it worked its way through difficult contracts. The UK company said an overhaul of its operations, along with its search for a new chief executive, remained on track. Shares of the company plunged 11.5 percent.