STOXX 600 ends higher after ECB's expected 'hold' verdict, defence stock boost

European shares finished higher on Thursday as a rally in defence stocks helped lift the main index, with investors taking in a widely anticipated European Central Bank decision to keep interest rates unchanged.

Defence stocks led index gains as investors weighed ongoing geopolitical tensions in the eastern part of the continent after Poland shot down a suspected Russian drone earlier in the week.

BAE Systems (BAES.L), jumped 6.3%, Rheinmetall (RHMG.DE), opens new tab rose 2.3% and Rolls-Royce (RR.L), opens new tab advanced 2.1%.

"The more we get these little touch points of continued reminders that there's ongoing uncertainty, the more investors are simply saying I need to have these defence stocks in my portfolio," said Daniel Coatsworth, chief investment officer at Moneyfarm.

Meanwhile, the ECB left interest rates unchanged on Thursday as expected but offered no clues about its next move, reiterating that the following decision will be data-dependent.