By Barbara Kollmeyer

MADRID (MarketWatch) -- European stocks extended gains on Thursday, helped by a well-received clutch of earnings from big companies such as Nokia Corp. and Fiat as well as signs of growth in Germany's economy.

The Europe Stoxx 600 index gained 0.6% to 267.71 in afternoon trading.

The index has risen 3.1% so far this month.

"This is even after we have seen less-than-sparkling economic data releases in the E.U. and the U.S.," said Stephen Pope, managing partner at Spotlight Ideas, in emailed comments. "More QE [quantitative easing] is coming and so rates will stay low. If the monetary transmission starts to work, one can expect a pickup in private-sector activity and capital formation."

Stocks in Europe took in stride the Philly Fed index, which came in slightly below expectations. Earlier, data showed that U.S. weekly jobless claims fell by 23,000 to 452,000.

Positive earnings news buoyed European equities.

"European stocks made comfortable gains following results from a number of key companies, offsetting frustration in the banking space," said Pope. "Nokia, Danone and Fiat SpA beat estimates. That has proven enough to outweigh disappointing earnings at Credit Suisse."

Pope said Nokia Corp. (NOK) pitched in with the "best gain since the year began" as it raised its industry forecasts. Shares of Nokia jumped 7% in Helsinki after it swung to a third-quarter net profit, beating forecasts.

The Finnish handset maker also announced restructuring plans and lifted its forecast for volume growth for the mobile device industry to more than 10% from a prior forecast of around 10%.

In Italy, shares of Fiat SpA jumped 3.3% after the car maker reported third-quarter profit jumped to 190 million from 25 million a year earlier. The company also revised higher its forecast for 2010.

Danone SA shares, meanwhile, rose nearly 5%, gaining after the French dairy giant reported a rise in quarterly sales and confirmed its full-year targets.

French stocks take the lead, Credit Suisse disappoints

Food and beverage was a leading sector on Thursday, helping to explain strong gains for the French CAC-40 index , which rallied 1.4% to 3,883.47.

Shares of Pernod Ricard SA advanced 5.7%. Sales for the company's fourth quarter rose 14%, edging past analysts' estimates.

"Overall a strong set of numbers from Pernod Ricard, with organic-sales growth in the quarter significantly ahead of our forecasts and the performances of Diageo," said analysts at Davy Stockbrokers in a research note.

Shares of Diageo PLC rose 2.3% in London.

On the downside, shares of Remy Cointreau SA fell 1.6% after it reported a 15% increase in revenue, driven by cognac sales, but noted modest growth in Europe.

Shares of Publicis Group SA jumped 4.5% after the group reported a 26% rise in revenue for the third quarter, beating estimates. Publicis cited an upturn in the global advertising market as helping organic growth rise 9.2%.

As for the not-so-positive news, shares of Credit Suisse Group AG (CS) fell 3%. The Swiss giant reported a 74% drop in profit as activity for its investment-banking unit slowed, disappointing investors.

Data lift for Germany, stocks fly in London

German stocks traded at levels not seen since mid-2008, drawing support after data positively surprised. The DAX 30 index rose 1.3% to 6,607.18.

Germany's preliminary composite PMI increased to 56.0 in October from 54.7, with the services index up to 56.6 from 54.9 and the manufacturing index up to 56.1 from 55.1.

"Thus it seems that Germany can continue to deliver strong growth and the risk of a double dip in the euro area has declined further," said Frank Oland Hansen, senior economist at Danske Bank, in a note.

Private-sector activity in the euro zone during October grew at the slowest annualized pace in a year. See more on the Markit preliminary composite purchasing managers index for October.

The German government also revised up its forecast for growth in 2010. The economy ministry said gross domestic product would rise 3.4% in 2010, slowing to 1.8% in 2011, compared to an April forecast of 1.4% growth for 2010.

Among the gainers, car maker Volkswagen AG rose 3.2%. The company is reportedly aiming to achieve its sales target of 10 million vehicles three years ahead of schedule, according to a person close to the matter, Bloomberg News reported.

In London, shares of HSBC Holdings PLC (HBC) rose 2.1%, helping to prop up the FTSE 100 index , which was up 0.7% to 5,770.13.

Also helping out in London was British Airways , shares of which rose 2.3%. The move higher reflected on market hopes a long-running and costly dispute between the carrier and its unions may be coming to an end.

On the downside, shares of TUI Travel PLC slumped 11% after the group restated prior-year financial results and announced its chief financial officer is stepping down at the end of the year.

Miners rose across the board in London, with gold futures also higher. Shares of Anglo American PLC gained 2.2% as the company reported that third-quarter platinum output rose 11% and diamond output was up 15%.