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Europe closes higher, DAX shines on Ukraine relief

European shares closed sharply higher on Monday as investors relaxed over the crisis in eastern Ukraine.

The FTSEurofirst 300 traded higher in afternoon trade and closed up 1.27 percent provisionally. Germany's DAX led the rally, seeing gains of 1.8 percent at the close.

Later this week, Federal Reserve chair Janet Yellen's address at the gathering of top central bankers at Jackson Hole will be in focus.

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Investors are looking for more guidance at Jackson Hole on Thursday. Yellen is set to focus on unemployment and wage growth, potentially offering markets a hint on the direction of monetary policy for the rest of the year.

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European Central Bank President Mario Draghi will also speak at the event, which investors will be watching given last week's poor European data.

Fears over an escalation of the crisis in eastern Ukraine had sent stocks sharply lower on Friday afternoon, but on Monday Russia said all issues related to it sending an aid convoy to Ukraine had been resolved. No progress was made in ceasefire talks, however.

Companies reporting earnings on Monday included U.K. homebuilder Bovis Homes and Nationwide.

Bovis said it expected to see a significant increase in 2014 profits, in line with forecasts, as it posted first-half results boosted by a record number of completions. The group said operating profit was up 150 percent in the period to 30 June 2014 compared to the same period last year. Shares in the group surged almost 5 percent.

Read MoreProperty:The greatest risk to the UK economy?

In other stocks news, Chugai Pharmaceutical Co shares rose 21 percent to a record high following a media report that Roche Holding AG is in talks to buy the almost 40 percent stake in the Japanese firm that it doesn't already own for about $10 billion.

Roche shares traded over 1 percent higher after the news.

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