European equities closed sharply higher on Monday, as a deal between Greece and its creditors looked to be edging closer.
It comes as crucial meetings of euro zone leaders and finance ministers to discuss new reforms offered by Greece to its creditors continued.
The pan-European Stoxx 600 index closed around 2.2 to 2.3 percent higher Monday, with all sectors trading in positive territory. Greece's main stock index was the strongest performer in Europe, closing 9 percent higher on the heightened expectations of an agreement.
U.S. stocks also rallied, as investors stayed optimistic on a deal between Greece and its creditors.
European markets
On Sunday, Greek Prime Minister Alexis Tsipras presented a new reforms package to its international creditors, in what appears to be a last-ditch effort to avoid a debt default. Greece must pay the International Monetary Fund, of the country's senior creditors, a repayment of 1.5 billion euros on June 30.
The move comes after five months of deadlock over what reforms that Greece must implement if it is to receive a final tranche of financial aid from creditors.
On Monday, major bourses reacted positively to a press conference by the head of the Eurogroup of euro zone finance ministers, Jeroen Dijsselbloem. He said the new Greek proposals were "broad and comprehensive," and formed a basis to restart the talks. Dijsselbloem went on to add that he was hoping for a deal later this week.
The French CAC and the German DAX closed sharply higher, both up around 3.8 percent. The U.K. benchmark FTSE 100 index closed around 1.7 percent higher.
Read MoreEurogroup meeting ends: 'Agreement later this week'
Individual stocks
French telecom company Bouygues was one of the best performers in Europe, closing up around 13 percent after European telecom company Altice said it had made an offer to buy the company. Altice ended the day up at 12.7 percent.
Shares of Thorntons jumped over 40 percent on Monday, after Italian chocolate maker Ferrero offered to buy the chocolate company.
Sky was one of the FTSE 100's best performers, with its shares closing up 3.5 percent after The Telegraph newspaper reported that the Murdoch family had rebuffed offers for its stake in the company, prompting speculation that the family could be preparing to up its holdings.
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