European stocks advanced, with the benchmark Stoxx Europe 600 Index posting the biggest two-day gain in almost 11 months, as China's cash crunch eased and German consumer confidence topped forecasts.

The cost of locking in China's interest rates slid for a fourth day and money-market rates fell after the central bank pledged to ease the worst cash crunch in a decade. The People's Bank of China has provided financing to some financial institutions to stabilize interbank lending rates and will use short-term liquidity operations and existing loan-facility tools to ensure steady markets, according to a statement yesterday.

German consumer confidence will rise to the highest level since 2007 next month, GfK AG said today. The sentiment gauge climbed to 6.8 from 6.5 in June, topping economists forecasts in a survey.

National benchmark indexes advanced in all 18 western European markets today, except Greece. France's CAC 40 climbed 2.1 percent, the most in two months. Germany's DAX rallied 1.7 percent and the U.K.'s FTSE 100 added 1 percent.

Colruyt gained 8.3 percent to 40.08 euros, the largest jump since June 27, 2012. Belgium's biggest discount food retailer said full-year earnings before interest, taxes, depreciation and amortization amounted to 699.8 million euros ($910 million), beating the average 684 million-euro analyst projection in a Bloomberg survey. The company also raised its dividend to 1 euro a share, exceeding the Dividend Forecast of 98 cents.

Direct Line climbed 3.8 percent to 227.4 pence, the highest since its initial public offering in October. The insurer said it may cut about 2,000 jobs as part of a plan to further reduce costs to 1 billion pounds by next year.

GSW increased 3.8 percent to 29.61 euros. CEO Bernd Kottmann will leave his post on July 15 after investors protested how he was hired, Berlin-based GSW said in a statement late yesterday. Chairman Eckart John von Freyend will leave on July 31. The decision ends two months of conflict that ended at a meeting in Berlin last week at which shareholders passed a no-confidence motion against Kottmann and voted to dismiss Freyend.

Afren Plc rallied 7.3 percent to 130.6 pence as the U.K. oil explorer in Africa and northern Iraq said its Ogo well discovered a "significant" light oil field in Nigeria.