Adding to positive sentiment, China's factory activity increased at its fastest pace in five months in May, according to a report over the weekend. In addition, two surveys showed that home prices fell slightly from the previous month, adding to fresh signs of cooling in the property market.
"While the PMI data doesn't completely dispel China growth concerns, it certainly shows the mild stimulus measures it has taken recently have been gaining traction," said Stan Shamu, market strategist at IG in a morning note.
On the economic front, traders are looking ahead to data on construction spending and manufacturing at 10 am ET. Spending is seen up 0.6 percent in April while the Institute for Supply Management's May read on manufacturing is seen rising to 55.5 from 54.9.
Other economic data this week include reports on factory orders and car sales, as well as the widely-watched jobs report on Friday. Investors will also be looking to Europe as Mario Draghi confronts the threat of deflation, preparing to unleash an array of measures to jolt the economy and ignite prices.
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