The pan-European STOXX 600 <.STOXX> ended the session 0.7 percent higher, its third day of gains after a sharp sell-off last week. Euro zone stocks and blue chips <.STOXX50E> also jumped 0.7 percent.

Basic resource stocks <.SXPP> provided the top boost, gaining 2.5 percent after London zinc hit a decade high, lifted by Chinese construction spending.

Glencore (>> Glencore), Boliden (>> Boliden), Anglo American (>> Anglo American) and Outokumpu (>> Outokumpu Oyj) rose by between 3.4 and 4.2 percent, while oil stocks <.SXEP> edged up 0.7 percent.

Euro zone GDP expanded by 0.6 percent quarter-on-quarter and the annual growth figure was upgraded to 2.2 percent from the earlier estimated 2.1 percent.

Stronger economic growth is part of the reason global active funds remain overwhelmingly positive on European equities, the biggest consensus overweight position according to Barclays’ analysis of investor flows.

"The market mindset is that Europe is recovering from a very deep, very long recession that hit at its financial core," said Christopher Peel, chief investment officer at Tavistock Wealth.

"The banking system is finally starting to show signs of having worked through the legacy of 2008-2009," Peel added.

Earnings drove some strong moves, with British builder Balfour Beatty (>> Balfour Beatty) jumping 6.4 percent, leading construction stocks higher, after first-half profits were boosted by a rebound in construction in Britain.

By contrast, a second-quarter profit disappointment weighed on Swedish food retailer ICA (>> ICA Gruppen), down 6.5 percent, while Danish healthcare product maker Coloplast (>> Coloplast A/S) dropped more than 6.2 percent after its third-quarter organic growth fell short.

Car insurer Admiral (>> Admiral Group) fell 6 percent after profits rose just 1 percent in the first half.

Second-quarter results season was drawing to a close, with earnings expected to grow 15 percent from the second quarter last year, or 12.8 percent excluding the energy sector, Thomson Reuters data showed.

"Earnings and earnings expectations are rising as you're getting a global recovery," said Tavistock's Peel.

M&A speculation again boosted Fiat Chrysler (>> Fiat Chrysler Automobiles) and Exor (>> Exor NV), the investment fund which owns the carmaker.

Fiat and Exor jumped 2.6 and 2.1 percent respectively, extending gains from Monday when a media report said a Chinese company may be interested in the carmaker.

Swedish healthcare firm Elekta (>> Elekta) gained 2.6 percent after JP Morgan upgraded it to "overweight".

"We believe the potential of (radiation therapy) Unity has not been fully captured by the market; this is reflected in the (approximate) ... 13 percent short interest in the stock," JP Morgan analysts said. "Consensus momentum could swing in the next six to 12 months."

(Reporting by Helen Reid and Kit Rees; Editing by David Holmes)

By Helen Reid and Kit Rees