Europe closes higher on Draghi, Wall Street gains

European shares closed higher on Monday following a key speech by Mario Draghi, the president of the European Central Bank (ECB), which boosted hopes of further monetary steps to boost the economy.

The German benchmark DAX and the French CAC were sharply higher on Monday. The former closed up 1.8 percent at 9510.1 points—down by around 5.4 percent from an all-time high of 10,051.1 in late June, according to Reuters. The CAC ended provisionally higher by 2.1 percent.

The U.K.'s FTSE 100 was closed for a bank holiday.


Draghi speaks

In a speech on Friday at the Jackson Hole central bank symposium in Wyoming, Draghi reiterated that the central bank could instigate more stimulus measures if necessary.

Barclays analyst Philippe Gudin described Draghi's speech as a "major event" that marked "a turning point in ECB rhetoric."

Read More'Groundbreaking' Draghi brings cheer to markets

The U.S. benchmark S&P 500 toppled another record on Monday, crossing 2,000 points. The rally also helped boost European shares.

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Roche trading higher

Shares of Roche Holding closed around 0.7 percent higher after the Swiss pharmaceutical giant agreed to buy U.S. biotech company InterMune for $8.3 billion in cash.

Read MoreRoche to purchase InterMune in $8.3 billion deal

Shares of German airline Lufthansa came under pressure on Monday after pilots threatened to strike if pay demands were not met. The stock was the worst performers on the Dax index, closing down around 0.2 percent.

French Prime Minister resigns

On Monday, French Prime Minister Manuel Valls announced the government's resignation amid an ongoing debate about France's economy. A new government is expected to be formed on Tuesday, after differences surfaced between members of the Socialist-led government.

Meanwhile, Germany's widely-watched Ifo business climate index came out and showed a fall to 106.3 in August, below market expectations.

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