European stock markets closed in positive territory on Wednesday, driven higher by investor satisfaction with a US Federal Reserve decision to maintain super low interest rates for the foreseeable future.

"Stocks that had drawn little support, such as financials (having suffered from the Greek debt crisis), are making clear gains," said analyst Xavier de Villepion of Global Equities.

In London the FTSE 100 index added 0.43 percent to reach 5644.63 points while in Paris the CAC 40 gained 0.48 percent to reach 3957.89. In Frankfurt the Dax rose 0.89 percent to 6024.28 points.

Elsewhere there were gains of 1.25 percent in Milan, 0.26 percent on the Swiss Market Index, 1.29 percent in Brussels, 0.97 percent in Madrid and 1.12 percent in Amsterdam.

US stocks advanced deeper into the green Wednesday in early trade.

The Dow Jones Industrial Average was up 0.36 percent to 10 724.60 at mid-day while the Nasdaq composite had risen 0.59 percent to 2392.10 points.

"A drop in prices at the wholesale level is helping lend some support to yesterday's maintained pledge by the Fed to keep a low interest rate environment," Charles Schwab & Company analysts said in a client note.

US producer prices declined sharply in February, snapping a four-month increase, on the back of slipping prices of energy-linked goods, the Labor Department said.

"Overall, this can be regarded as a pleasing inflation report ahead of the Consumer Price Index on Thursday," Briefing.com analysts told clients.

Markets welcomed the Fed's pledge on Tuesday to keep interest rates "exceptionally low" for an "extended period" in light of tame inflation and high unemployment in a fragile recovery from severe recession that began in December 2007.

Banks were well-supported in European trade. Credit Agricole rose 1.13 percent, Societe Generale 2.16 percent and BNP-Paribas 0.42 percent.

Also in Paris, industrial groups dependent on macroeconomic developments were in demand as well. Steel giant ArcelorMittal added 2.65 percent while cement group Lafarge rose 3.03 percent.

In Frankfurt banks were likewise among the day's big gainers, with Deutsche Bank adding 1.76 percent and Commerzbank 2.58 percent.

Industrial giant Siemens jumped 3.2 percent on reported plans to cut its workforce by more than 1000 posts in its information services unit.

Automaker BMW lost 0.87 percent after having predicted that its first quarter this year would be relatively soft.

Asian markets were earlier spurred higher after the Bank of Japan held its key interest rate and raised the amount of cash available for banks.

Tokyo jumped 1.17 percent and Hong Kong rallied 1.72 percent.

The BoJ decided to extend emergency steps launched last year to boost the economy by doubling short-term loans available to banks to ¥20-trillion.

And the bank left its benchmark interest rate unchanged at 0.1 percent as it fights stubborn deflation and weak demand in the world's number two economy.