The STOXX 600 added 0.5% to close at over six-week highs and logged its third consecutive week of gains, up 0.5%.
News that the Chinese property developer had made a bond payment to avert a default lifted the mood globally. Worries about contagion from a potential default have rattled markets recently.
France's blue-chip CAC 40 rose 0.7% and outperformed its European peers, riding on a 5.1% surge in L'Oreal shares following the cosmetics company's strong results.
Shares in Dutch semiconductor equipment maker ASML and German software firm SAP rose 3.2% and 1.2% respectively, after stumbling earlier this week following their results. The tech sector rose 1.5%.
Investors appeared to look past a survey that showed growth in euro zone business activity slowed in October as firms face soaring costs due to supply-chain constraints, while the bloc's dominant service industry struggled amid ongoing COVID-19 concerns.
Automaker Renault and Continental both flagged chip-shortage hitting output and margins.
"We've lots of earnings beats on lowered expectations, and then you're getting comments from CEOs suggesting supply chains are damaged - but certain firms have said that they're on top of it," said Keith Temperton, sales trader at Forte Securities. "That's hopeful for the markets."
A bunch of upbeat earnings lifted Wall Street's S&P 500 to a record high, while its European counterpart is less than 1% shy of its August peak.
Europe Inc is expected to see a 47.6% rise in third-quarter profit to 96.1 billion euros ($112 billion), latest data from Refinitiv I/B/E/S showed, a slight improvement from last week's 46.7% growth forecast.
Euro zone inflation expectations hit their highest levels in years, putting additional pressure on the European Central Bank over its insistence on maintaining crisis-era stimulus. The central bank is set to meet next week. [GVD/EUR]
"That inflation is transitory does not necessarily mean that it is short-lived. An adjustment of supply to the changes in patterns of demand caused by the pandemic may be slow, and keep upward pressure on prices for longer," strategists at Citi wrote in a note.
Swedish mining firm Boliden dipped 6.8% as its third-quarter operating profit fell below market forecasts.
Remy Cointreau rose 1.8% after it said it was growing increasingly confident about its full year outlook after second-quarter sales beat expectations.
(Reporting by Anisha Sircar and Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu and Anil D'Silva, William Maclean)
By Anisha Sircar and Susan Mathew