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Europe shares close mixed; Italian banks rally

European stocks closed mixed on Monday, slightly boosted by hopes that stimulus measures will be announced by the European Central Bank (ECB) later this week. In addition, U.S. Federal Reserve Chair Janet Yellen boosted stocks when she said there was still room for the Fed to help the U.S. economy.

Draghi to act?

The pan-European FTSEurofirst 300 Index provisionally closed higher by 0.1 percent, near a three-week high. It was its fifth-straight session of gains, as the first quarter came to a close.

On Monday, a flash reading of consumer price data for the euro zone came in at 0.5 percent. Analysts polled by Reuters expected consumer prices to have grown by 0.6 percent in March, lower than last month's 0.7 percent reading.

This figure is a key reading of inflation and a closely-watched metric for the bloc's central bank. This slight miss could force the ECB's hand this week, with some analysts expecting more stimulus measures to be announced on Thursday.

(Read more:And the best stock markets this year are…)

The U.K. FTSE 100 closed the day unofficially lower by 0.3 percent, ending the first quarter of 2014 down by 2.24 percent, due to the index's exposure to China.

2014 has seen concerns grow that growth in China is slowing. Tensions regarding the situation in Crimea have also weighed on European bourses over the later part of the quarter.

(Read more: Euro zone inflation slides, fuels deflation fears)

However, U.S. stocks were higher on Monday as Fed Chair Yellen said the central bank will continue to bolster the U.S. economy, given the halting pace of the recovery and a still moribund job market.

Yellen said at a speech in Chicago that the Fed's "extraordinary commitment" — in the form of massive bond-buying and ultra-low interest rates — was "still needed, and will be for some time."

Italy's stellar quarter

The Italian FTSE MIB closed the day up around 0.9 percent and soared over 14 percent for the first quarter of 2014, making it the best-performing European index. This has come despite a change of guard at the heart of government, some tough talk on cost-cutting, and even the sale of state-owned cars on eBay.

However, Italian banks led the country's stocks higher on news that they will not require state funds. Banco Popolare was higher by 15.8 percent on the first day of a 1.5 billion euro ($2.06 billion) capital increase, which appeared to have attracted the interest of U.S. investors.

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC 40
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IBEX 35
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French/Turkish elections

Over the weekend, people took to the ballot boxes to vote in local elections in both France and Turkey.

French President Francois Hollande's socialist government suffered a defeat, with gains for the main opposition UMP party and the far-right National Front.

The French CAC 40 closed down unofficially 0.3 percent on Monday, as weak trade balance data and suggestions that Hollande would reshuffle his cabinet weighed on blue-chip stocks.

(Read More: France reshuffle looms, as Ayrault resigns as PM)

In Turkey, early results put Prime Minister Tayyip Erdogan's ruling AKP Party ahead, with between 44 and 48 percent of the vote, according to Reuters. Any figure above 40 percent would cause markets to rally, analysts said, with Erdogan now expected to run for the presidency at elections in August. This comes despite civil unrest in the country and critics rounding on Erdogan for his increasingly autocratic stance. Turkey's BIST 30 Index was higher by 0.7 percent on Monday.

(Read More: Erdogan says Turkish vote will bolster him in power struggle)

German retail sales beat

February retail sales for Germany managed to beat expectations by a large margin. The month-on-month reading came in up 1.3 percent, versus predictions for a 0.5 percent fall. The year-on-year figure also delivered an impressive beat with a reading of 2.0 percent, versus a 0.8 percent estimate.

In corporate news, U.K.-listed basic resources company Polymetal was higher by 0.8 percent, despite the part-owned Russian company signaling weak earnings.

Elsewhere, banking stocks were higher, despite Switzerland's competition watchdog announcing on Monday it had opened an investigation into banks over possible collusion to manipulate foreign exchange rates. Shares of UBS, Credit Suisse, Julius Baer, Barclays and Royal Bank of Scotland all traded higher on Monday.

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