• It's a busy day for Europe's markets, with Total, Shell and Airbus among the companies reporting earnings before the bell.
• Finnish telecoms giant Nokia soared after beating first-quarter revenue and profit expectations on the back of strong network and 5G sales.
• German consumer price inflation grew to 2.1% in April, exceeding the European Central Bank's target of "close to but below 2%" for the second consecutive month.

LONDON — European stocks closed slightly lower on Thursday as markets reacted to the U.S. Federal Reserve's decision to hold interest rates near zero and digested a fresh round of corporate earnings.

The pan-European Stoxx 600 finished down by 0.2% after an initial rally earlier in the session. Banks jumped 1.3% to lead gains while autos slid 2.6%.

It was a busy day for Europe's markets, with Total, Shell and Airbus among the companies reporting earnings before the bell.

Shell slightly exceeded first-quarter profit expectations to record adjusted earnings of $3.2 billion and raised its dividend by around 4%. However, the oil major's stock finished 1% lower.

France's Total saw its shares fall 0.9% despite profits surging to pre-pandemic levels on the back of stronger commodity prices.

Airbus also slightly beat expectations in its first-quarter results, with the world's largest planemaker reporting a particularly strong free cash flow of 1.26 billion euros ($1.53 billion). Airbus shares gained 0.7%.

Spain's Linea Directa, formerly the insurance unit of Bankinter, surged more than 23% in its market debut in Madrid on Thursday to lead the Stoxx 600.

Finnish telecoms giant Nokia soared 8% after beating first-quarter revenue and profit expectations on the back of strong network and 5G sales.

At the bottom of the European blue chip index, Italian steel pipe supplier Tenaris fell 6.7% after missing first-quarter core profit expectations.

On the data front, euro zone economic sentiment surged in April, with the European Commission's monthly survey showing optimism climbing to 110.3 points compared to 100.9 in March, vastly outstripping estimates in a Reuters poll.

German consumer price inflation grew to 2.1% in April, exceeding the European Central Bank's target of "close to but below 2%" for the second consecutive month. The reading sent German bund yields surging.

Stateside earnings deluge

Market focus has been dominated by the U.S. central bank and earnings reports this week. At the end of a two-day policy meeting on Wednesday, the Federal Reserve said that it would hold interest rates near zero.

Fed Chairman Jerome Powell said the recovery is "uneven and far from complete." He added that it's still not time to discuss reducing policy accommodation, including asset purchases.

On Wall Street Thursday, the S&P 500 clinched a new intraday record after blowout earnings results from Apple and Facebook.

Meanwhile, the U.S. economy grew 6.4% in the first quarter, new figures showed Thursday, while initial jobless claims for the week ending April 24 fell 13,000 to 553,000.

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- CNBC's Pippa Stevens contributed to this market report.