European shares closed higher on Monday, boosted by the formation of a growth and reform-minded government in Italy and hopes of central bank stimulus measures later this week.
(Read More: Why EU Stimulus Is Back on the Table)
The pan-European FTSEurofirst 300 provisionally closed 0.5 percent higher at 1,202.61 points, helped by hopes of further monetary easing measures when the European Central Bank and the Federal Reserve both meet later this week.
Milan's FTSE MIB closed unofficially 2.2 percent up, having turned higher when Italy's new Prime Minister Enrico Letta gave his maiden speech, in which he emphasized the need for political and economic reforms. His installation ends the political impasse that has ensured since the country's inconclusive election two months ago. However, some analysts doubt how long the new coalition government will last.
"We believe the new government is, from a market perspective, better than most other alternatives that had been considered – not just in the past few days but even before the elections of two months ago," said Credit Suisse's director of European economics, Giovanni Zanni.
(Read More: Italy Will Die From Austerity Alone: Prime Minister)
In a further sign of market confidence, Italy's cost of borrowing fell on Monday at its first bond auction since the new government cabinet was announced. The Treasury sold 3 billion euros worth of ten-year debt at an average yield of 3.94 percent, down from 4.66 percent at a similar auction last month.
Meanwhile, in Greece, the parliament approved the reforms on which its next tranche of international aid is contingent. The move will translate into 15,000 public sector jobs losses.
(Read More: Greece Passes Law to Unlock More Rescue Loans)
Negative news came from the European Commission on Monday, which reported that confidence in the euro zone economies fell for the second straight month in April. Even in Germany, sentiment fell by 2.3 points. However, confidence in Portugal rose for the fourth consecutive month, according to the country's own statistics body.
(Read More: Economic Mood in Euro Zone Sours Again in April)
Vodafone, Verizon Merger Talks Continue
Six major Vodafone investors said $100 billion was not enough for the British company's stake in its U.S. joint venture with Verizon Communications, and urged the latter to come up with an offer of at least $120 billion. Vodafone's shares have rallied sharply in 2013, with investors hopeful of a full takeover by Verizon.
Meanwhile, Lloyds Banking Group is to sell its Spanish retail banking division to Banco Sabadell, in exchange for a 1.8 percent stake in the Spanish lender. Lloyds will take a 250 million pound ($388 billion) loss on the disposal, Reuters reported.