The pan-European STOXX 600 index rose for a fourth straight session, adding 0.5% to the previous day's gains sparked by tame inflation data and the U.S. Congress approving one of the largest economic stimulus measures in history. [.N]

A narrower index of euro zone blue chip stocks gained 0.7% to trade at its highest level in more than 13 years.

The ECB said it would use its 1.85 trillion Pandemic Emergency Purchase Programme (PEPP) more generously over the coming months to stop any unwarranted rise in debt financing costs. ECB President Christine Lagarde also warned against premature policy tightening.

"The market was concerned about rising yields which could lead to quickly shrinking equity risk premia in the euro zone," said Florian Regnery, cross asset strategist at Commerzbank, noting the favourable reaction to the ECB's commitment to contain rising bond yields.

"It is a strong signal...we were not expecting them to be so dovish. We thought they would merely stress the flexibility of (the PEPP) but would not follow it up with concrete action just yet."

The technology, mining and travel & leisure sectors were the top gainers in Europe, each rising more than 2%. Banks fell the most, with UK-based lender HSBC's shares down 4.7%.

European stock markets are on course for strong weekly gains on hopes that massive stimulus measures and vaccination programmes will spur a recovery in the global economy, while calmer bond markets boosted appetite for riskier assets like equities.

France's state-controlled power group EDF jumped 10.9% after Finance Minister Bruno Le Maire told local TV that there will be no break-up of the company as negotiations between Paris and Brussels over an overhaul of the company enter a final stage, sources told Reuters.

Rolls-Royce edged up 0.7% as the British engine-maker stuck to its forecast to burn through less cash this year after posting a worse-than-expected 2020 loss.

German fashion house Hugo Boss AG was down 3.6% after saying it expects coronavirus restrictions to keep weighing on its business in the first quarter, and German chemicals maker Lanxess fell 4.8% after a disappointing 2021 earnings outlook.

(Reporting by Sruthi Shankar and Devik Jain in Bengaluru; Editing by Kirsten Donovan)

By Shreyashi Sanyal