What factors led to urbanization in medieval europe?

The biggest factor in this era was political, cultural, and social stability derived from consolidation of feudal states based on Christian faith. After the defeat of the migrating nations like Magyars, Europe cased to have external threats that caused widespread migration of nations that completely overrun whatever civilization and state was in their path. This lead to stabilization of the economy based on feudal agrarian system enough to support rising population. Stable farming, improved deep plough technique and widespread clearing of forest increased arable land in Europe into level existed in Roman era. Improved food supply supported not only burgeoning population, but also increasing size of the cities, and state/church bureaucracy. 
Between 1000-1200, the economy expanded and also diversified. The cities became bigger from small villages, and many future centers of commerce and banking have originated in that era. Bigger cities expanded demand for more goods and more population had money to pay for luxuries that were coming from Far East. By 1100, the number of cities and trading posts increased in Europe so dramatically, that it did not take to peasants more than two hours to walk into market to sell their harvest. This increased bond between peasant and the city, where cities had regular supply of food, while peasant was able to exchange it for coinage that he paid to feudal lord. Monetarization of the economy and emphasis on coinage over barter was big impulse into economy. It is estimated that in 12th century, there was three millions of coins in circulation for every 1 mil of population. This stimulated commerce as the coinage became widespread across the continent. 

As the economy and state became more sophisticated, the feudal civilization went through cultural revolution, where Church became the pillar of the society. It provided bureaucracy, bookkeeping, accounting, and other services, while also became the biggest sponsor for education, art, and culture. The Church became dominant cultural influence of the society and became the most closely associated with architectural style prevailing in this time, the Romanesque style. The bishoprics became associated with large cities and attracted large, diverse population. The ruling dynasties attempted to imitate the metropolitan seats, creating first European metropolis after the fall of Roman Empire. The explosion of the city sizes can be detected across continent, which also shows consolidation of the city economy. The feudal nobility and dynasties became more established in the state, protected by dynastic ties and surrounded by well armored knighthood. Such stability was vital for the state and its survival in overall extremely ruthless times.