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European shares close higher after Draghi speaks

European shares closed higher on Monday after European Central Bank President Mario Draghi reiterated that he was willing to do more to stimulate the euro zone economy if necessary—including purchase sovereign bonds.

The pan-European FTSEurofirst 300 turned higher on Draghi's words, which were addressed to the European Parliament and provisionally closed 0.5 percent higher at 1,352 points.

Draghi said additional stimulus measures "might entail the purchase of a variety of assets, one of which is sovereign bonds."

Read MoreECB's Draghi: Buying sovereign bonds is an option

German and French benchmark stock indexes unofficially ended 0.6 percent and 0.5 percent higher respectively. London's FTSE 100finished around 0.2 percent higher.

Spain and Italy's closed sharply higher, with both bourses gaining over 1 percent at the close.

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FTSE
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DAX
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IBEX 35
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Meanwhile, European mining stocks, with their heavy exposure to China, were major gainers after a hectic day in the Hong Kong and Chinese stock markets.

Chinese and Hong Kong shares saw heavy trading volumes on the launch of the "Shanghai-Hong Kong stock connect" on Monday. The program allows foreign investors to place buy or sell orders on Shanghai's A-share market through brokers in Hong Kong. Chinese investors meanwhile will be able to use mainland brokers to invest in Hong Kong's H-share market.

Japan contracts

European shares had started the trading session in negative territory, after the Japanese benchmark Nikkei index fell by nearly 3 percent earlier in the day.

Data showed Japan's economy contracted by an annualized 1.6 percent between July and September, rather than the forecast 2.1 percent gain.

The news also dampened the U.S. open on Monday, with the S&P 500 retreating from its 41st record close of the year.

Read MoreDollar-yen rally stalls: What next?

In stocks news, Merck shares rose over 3 percent after news it announced a deal to produce a drug in collaboration with U.S. pharma giant Pfizer. Merck's shares closed around 1.1 percent higher on the day.

Read MoreGerman Merck, Pfizer in cancer immunotherapy deal

Shares of Abengoa jumped as much as 24 percent after the Spanish renewable energy firm announced that it was setting new debt targets for next year. Shares pared gains to close around 20 percent higher.

Ukraine fighting continues

In Ukraine, there was renewed unrest in the eastern region as President Petro Poroshenko declared that the country was ready for "total war" with neighboring Russia.

Taking to his personal twitter account on Monday morning, he pointed the finger at Moscow and said that the Kremlin had disrespected a brief respite in the fighting on its borders.

"We are prepared for a scenario of total war," he said.

Read MoreWe're ready for 'total war': Ukraine PM

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