European markets closed slightly higher on Monday, after the bond market was hit by fresh losses and traders continued to digest the results of the U.S. presidential elections.
'Trump trade' still in play
The pan-European STOXX 600 eked out gains to close 0.22 percent higher. Utility stocks were down 2 percent, dragging down the wider benchmarks. The sector is seen as a defensive play and sensitive to the "risk-on" sentiment and sharp rise in bond yields that investors have witnessed over the past few days.
Chris Weston, chief market strategist at IG Index, said the current investment environment has been driven by the "central thematic of reflation, nationalism and de-regulation" coming out of U.S. President-elect Donald Trump's administration.
"It seems it is too early to fade this move and as long as you are in assets that are directly reacting to this central thematic then stay with it," Weston told CNBC by email.
The U.S. dollar hit 11 month highs at the start of the trading week which further added to its upward trend since Donald Trump's surprise victory.
Analysts see Trump's policies as leading to higher inflation which would attract inflows into the U.S. dollar and boost expectations that the Federal Reserve could raise interest rates soon.
Higher bond yields and the prospect of an interest rate rise helped the European banking and financial services sectors, two of the best performers in early trade on Monday.
Siemens to buy Mentor Graphics
In business news, Siemens agreed to buy U.S. firm Mentor Graphics in a $4.5 billion all-cash deal, sending shares of the German company higher.
London-listed DCC said full-year profit will be ahead of market consensus and announced a deal to buy natural gas retailer Gaz Européen for 110 million euros ($119 million). Shares of the firm closed 2.8 percent higher.
Shares of Swedish debt collection firm Intrum Justitia rallied over 7.8 percent after it announced planes to merge with Norway's Lindorff.
RWE said it sees 2016 earnings at the upper end of its guidance range, but shares reversed earlier gains to finish in negative territory.
Oil prices lower
Meanwhile, economic data out of China on Monday were mixed. China's fixed-asset investment rose 8.3 percent in the January-to-October period, beating market expectations, while October industrial output and retail sales growth missed forecasts.
Oil prices were heading lower yet again on Monday after OPEC reported record output at the end of last week. Pressure on the U.S. crude price continues to grow ahead of a key OPEC meeting and Brent crude was trading below $44 as a result. And amid the focus on risk assets, the price of gold – a typical safe-haven – fell.