European shares rose on Thursday as signs of progress in U.S.-China trade talks helped investors look past worries over global growth and Britain's chaotic effort to leave the European Union.

The pan-region STOXX 600 index rose 0.2 percent with Frankfurt's trade-sensitive index .GDAXI climbing about 0.4 percent.

China has made unprecedented proposals on issues like forced technology transfers as it works with the United States to end their trade war, U.S. officials told Reuters on Wednesday.  In addition, Premier Li Keqiang said China would expand market access for foreign banks and insurance companies.

Basic resources led gains on the STOXX, but banking stocks fell as bond yields, and what they say about expectations for global growth, continued to decline.

"European stocks are slightly higher. It seems almost a battle of ideas," said Teeuwe Mevissen, senior market economist, eurozone at Rabobank in Utrecht. "In the background you have Brexit and not less important are trade talks between China and the U.S. and the slowdown in China."

Britain's exporter-heavy FTSE 100 rose 0.6 percent as sterling weakened after Prime Minister Theresa May failed to sway hard-line opponents of her proposed Brexit agreement, leaving the process deadlocked.

"In general, markets still assume that a Brexit deal will take place or you will get a prolonged delay. The 'no deal' is not completely ruled out, but it's certainly not the basic scenario for market participants," said Mevissen.

Efforts to persuade lawmakers to back May's deal will continue on Thursday, but it remains uncertain how, when or even if Britain will leave the EU. 

In the euro zone, German biotech company Evotec lead gains on the STOXX, rising 4.5 percent after its results beat expectations. Tobacco stocks Imperial Brands IMB.L and British American Tobacco gained about 2 percent after Citi upgraded each to "buy".

Car makers extended gains from Wednesday but Fiat Chrysler Automobiles slid 1 percent after Nissan Motor Co's chief executive said he was unaware of discussions about its French partner Renault SA  making a bid for the company. 

Adding to its woes, the Italian carmaker's German rival Volkswagen said it was not interested in a partnership with the company.

Shares of 1&1 Drillisch , a unit of United Internet , fell 12 percent after the telecom service provider issued a disappointing profit outlook. 

Debenhams dropped 23 percent after the retailer said its bondholders agreed to change the terms of some of their bonds, a move that could end a bid from Mike Ashley's Sports Direct  and wipe out shareholders. 

(Reporting by Agamoni Ghosh and Medha Singh, editing by Larry King) ((Agamoni.Ghosh@thomsonreuters.com; +918067491130; Reuters Messaging: Agamoni.Ghosh.thomsonreuters.com@reuters.net))