LONDON, March 1 (Reuters) - European shares closed higher on Thursday, boosted by euro zone banks as improved sentiment after the European Central Bank's second long-term liquidity injection helped some peripheral bond yields to fall and further allayed default risks among corporates.
The FTSEurofirst 300 index of pan-European shares provisionally ended 1 percent higher at 1,086.04 points, hitting levels not seen since Feb. 22.
Banks added most index points, rising 1.8 percent after Spain's borrowing costs fell at an auction and Italy's yield fell to levels not seen since September.
"The funding risk in the banking system has reduced substantially," Dennis Jose, strategist at Barclays Capital, said. "The risk the sovereign having to eventually bail out the banks has also reduced with the LTRO." (Reporting By Francesco Canepa)