European markets extended gains in the opening minutes of trade as stimulus reassurances from ECB and Federal Reserve chiefs boosted investor sentiments.

The FTSEurofirst 300 index, tracking the region's blue-chip stocks, gained 0.4 percent to 1,164.73.

The UK's FTSE 100 and Germany's DAX climbed 0.5 percent each. Spain's IBEX advanced 0.7 percent.

France's CAC-40 and Italy's FTSE MIB added up 0.5 percent as well.

The single currency showed modest strength against the dollar, trading at about $1.31.

The split verdict in the Italian election that triggered a political deadlock dampened European market sentiments this week. But concerns eased slightly after Italy's bond sales evoked solid demand.

Sentiment improved further after European Central Bank chief Mario Draghi reiterated that the central bank is not looking to halt its crisis measures. He added that the eurozone is seeing a slow recovery which will pick up in the second half of this year.

Markets also cheered at Federal Reserve Chairman Ben Bernanke's reassurances on the central bank's stimulus plans at a second congressional testimony. Minutes of a recent Fed meeting that showed differences among members had sparked widespread concerns on the quantitative easing measures.

But US economic concerns persist as the so called "sequester" looms and automatic spending cuts worth $85bn kick in.

Banks across the region are likely to be in focus during the day after European Union leaders' decision to cap top bankers' bonuses.

In corporate news, the Royal Bank of Scotland has reported its fifth straight annual loss, meaning it has lost money every year since the government bailed it out in 2008. RBS has posted a pre-tax loss of £5.17bn.

Asian markets had ended higher earlier with Japanese stocks soaring after the government announced its nominee for the Bank of Japan's governor post.

The Nikkei average index ended 2.71 percent higher at 11559.36 while South Korea's KOSPI was up 1.12 percent to 2026.49. Australia's S&P/ASX 200 added 1.33 percent to 5120.40.

In China, the Shanghai Composite Index rose 2.26 percent to 2365.59. Hong Kong's Hang Seng traded 1.60 percent to 22938.46 towards close.

Earlier in the day the Japanese government nominated the Asian Development Bank chief Haruhiko Kuroda as the successor to Masaaki Shirakawa, who will step down next month. The decision is along expected lines as Kuroda's pro-stimulus stand and international network are seen as the right combination for the government's stimulus plans.

The news weakened the yen, which had showed signs of firming early this week after the Italian election results brought fresh eurozone concerns. The currency climbed to 92.38 during the day from the 90.85 touched earlier.

The Japanese parliament is set to vote on the nomination next month.

Meanwhile, official data showed that Japan's industrial output improved for the second month in January, underscoring the effectiveness of the government's stimulus measures. Output rose1 percent from the 2.4 percent recorded in the previous month.