European equities closed higher on Monday after a negative start, boosted by strong trading on Wall Street, plus euro zone trade surplus data.
The pan-European FTSEurofirst 300 Index provisionally closed 0.5 percent higher at 1,304.5 points, joining Asian and U.S. stocks in a global "risk-on" rally. Euro zone trade surplus data, released mid-morning, showed a rise in September, and investors reacted positively to the news.
U.S stocks edged higher on Monday, with the S&P 500 and the Dow Jones Industrial Average (Dow) continuing to climb. Investors remained optimistic about ongoing stimulus from the Federal Reserve, and looked to economic reports this week on retail sales and manufacturing to measure the health of the economy.
(Read more: S&P 500 clears 1,800; Dow surpasses 16,000)
While the Dow and S&P 500 knocked out a sixth week of record-clearing gains last Friday, Michael Hewson, chief market analyst at CMC Markets, said European investors were less bullish.
"It appears that despite concerns about the case for global growth investors have adopted an almost devil-may-care attitude to U.S. equities, after last week's comments to the Senate Banking Committee from Fed Chair elect Janet Yellen," he said in a morning note.
"While this continues to turbo charge U.S. markets, and Asia markets are broadly getting a lift after dissecting some of the detail from the Chinese plenum reforms, European markets continue to remain rather more cautious."
A few clues as to U.S. monetary policy could come this week, with a speech by Fed Chairman Ben Bernanke in Washington expected on Tuesday night, and on Wednesday, the release of minutes from the Federal Open Market Committee's October meeting.
In addition, taper-related scrutiny of the jobs market will give Thursday's initial jobless claims data added importance.
China unveil reforms
China late on Friday unveiled bold reform plans from its Third Plenum, including easing the one-child policy, implementing residence registration reforms, allowing market pricing of key resources and further financial liberalization.
"The reform package will have a long-lasting positive impact on China's equity market outlook," Deutsche Bank said in a report, forecasting the MSCI China index would rise 20-25 percent over the next 12 months.
(Read more: China's economic reforms: What you need to know)
Meanwhile, investors will be watching Italy this week to see if the fragile Italian government can survive a key split within Silvio Berlusconi's party this weekend, which is a key coalition partner. Italian Interior Minister Angelino Alfano said on Saturday that all five center-right ministers would remain in government after a split in Berlusconi's party, and that the stability of the ruling coalition was not at risk.
In stocks news, shares of Aberdeen Asset Management closed around 14.7 percent on Monday, after the investment management group reported a 7.1 percent annual rise in assets under management.
Sonova, a maker of hearing aids, saw its shares close around 6.8 percent higher after it reported a more than 10 percent rise in first-half profit, and also raised its full-year guidance.
EADS, which own aircraft manufacturer Airbus, announced promising order volumes at the Dubai Air Show on Monday; shares closed higher by roughly 2.2 percent.
(Read more: Boeing: 'Not anticipating any more 777 orders')
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