LONDON (Reuters) - A rally in European stocks picked up pace on Thursday, following the lead of Asian shares which hit a ten-year peak overnight, as services growth data for the euro zone confirmed a strengthening economy was bolstering corporate activity.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, January 2, 2018. REUTERS/Staff/Remote

Gains spanning cyclical sectors including industrials .SXNP and banks .SX7P drove the pan-European STOXX 600 .STOXX up 0.5 percent while euro zone stocks .STOXXE and blue-chips rose 0.8 percent.

Services PMI data showed the euro area was near its best growth in seven years, while services growth in Italy and Spain beat the previous flash estimates.

Banks Santander SAN.MC, BNP Paribas BNPP.PA and ING INGA.AS were among the top boosts to the STOXX as increasing enthusiasm about the euro zone's recovery helped push money into financial stocks.

“The continued strength and breadth of the business surveys is encouraging,” said Mike Bell, global market strategist at JP Morgan Asset Management, adding the improvement in Italian PMIs was a positive heading into the election.

“We continue to believe that the outlook for European equities is positive, aided by the potential for close to ten percent earnings growth in 2018,” Bell added.

The improving economic backdrop drove analysts to hold back on downward revisions for euro zone company earnings as they awaited the beginning of the fourth-quarter results season.

Better-than-expected U.S. car sales data and rising oil prices also drove auto and energy stocks higher.

Germany's DAX .GDAXI led the way with a 0.9 percent gain thanks to strong carmakers and industrials, while Britain's FTSE 100 .FTSE hit a record high.

U.S. car sales data for December beat analysts' expectations, driving European automakers .SXAP up 1.5 percent, leading sector gainers.

Italian carmaker Fiat Chrysler FCHA.MI rose 4 percent to hit a record high, among top STOXX gainers, while Daimler DAIGn.DE, Volkswagen VOWG_p.DE and BMW BMWG.DE led the DAX.

“Defensive sectors, industrials, energy and IT could offer interesting opportunities,” said Romain Boscher, co-head of equities at Amundi. On small- and mid-caps Boscher said he remained positive on cyclical themes.

Remy Cointreau RCOP.PA was a rare laggard, down 2.9 percent after Investec downgraded the stock, saying Chinese anti-corruption measures could affect consumption of costly status symbol products like cognac.

(Euro zone earnings pessimism fades - view the graphic reut.rs/2Cma4eS)