European markets were modestly higher on Thursday, bolstered by energy shares and the U.S. Federal Reserve sticking to script about monetary tightening, with sentiment fragile on lingering worries about slowing economic growth.

The pan-European STOXX 600 index rose 0.2% by 0840 GMT, extending gains to a second day.

Gains were largely broad-based, led by a 0.6% rise in energy shares as crude prices climbed on tight supply.

Overnight, minutes of the Fed's early May policy meeting showed policymakers' belief in the strength of the U.S. economy. However, they agreed to raise interest rates by 50 basis points at the next two meetings to tame surging prices exacerbated by the war in Ukraine.

"Investors appear to have taken some comfort from the fact that the (Fed) minutes did not lay out an even more aggressive path of monetary tightening despite (inflation) remaining at elevated levels," said Stuart Cole, head macro economist at Equiti Capital.

The minutes pointing to the possibility of a pause in tightening after July should inflation start to ease was also welcome, Cole said.

The European Central Bank is expected to begin its hiking cycle in July, leaving investors worried about a likely squeeze on the global economy.

Miners declined 0.4% and utilities gave up 0.8%, limiting gains.

Water company United Utilities slumped 7.6% after the firm reported no increase in average household bills for the full year. Other British utilities also slipped on worries over an energy windfall tax being extended to the sector.

Chipmakers also fell after U.S. peer Nvidia forecast current-quarter sales below analysts' expectations. Infineon, BE Semiconductor and ASM International were down between 0.4% and 1.8%.

Nvidia also became the latest global firm to warn of sluggish China demand due to lengthy COVID-19 curbs.

The Institute of International Finance slashed its 2022 growth outlook for global output in half to 2.3% on Wednesday, citing worries about China, the Russia-Ukraine war and tighter U.S. monetary policy.

These are expected to keep a lid on European stocks, with the STOXX 600 seen reaching 450 points by year-end - just about 3.5% higher from current levels, according a Reuters poll.

BT Group slid 4.6% after Britain launched a national security review of a deal by the telecoms group's biggest shareholder Patrick Drahi to increase his stake to 18%.

Some markets in Europe, including Switzerland, Sweden and Finland, were closed for a local holiday.

(Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu and Sriraj Kalluvila)