European markets started the new year on a negative footing, only to reverse losses during trading to close higher.
The pan-European Stoxx 600 closed 0.5 percent higher Monday after new data releases showed positive outlooks for businesses in 2017.
The German DAX was up by 0.84 percent, breaking new highs, while the French CAC was 0.29 percent higher. The FTSE 100 returns to trading after the New Year weekend only on Tuesday. Markets were also closed in the U.S.
The final reading of the 2016 manufacturing purchasing manager's index stood at 54.9 in December. This represented the fastest growing pace in more than five years. Looking at the German data in particular, the manufacturing sector grew at its highest in nearly three years.
All sectors were trading positive.
In corporate news, the chairman of Deutsche Bank, Paul Achleitner told Frankfurter Allgemeine Sonntagszeitung that there is no European merger or a state bailout planned for the German lender. This comes after Deutsche Bank announced last week a $7.2 billion mortgage settlement with the U.S. authorities. The bank's shares started Monday down by 0.41 percent but closed in positive territory up more than 1.7 percent.
Shares of the newly launched Italian bank Banco BPM closed up by nearly 9 percent on its market debut.
Media reports stated that the U.S. firm Apple is planning to reduce its production of iPhone 7 models due to a sluggish demand.
The German automaker Volkswagen is still hopeful to reach a deal with the U.S. over the emissions scandal before President Obama leaves office later this month. Its shares closed up 2.5 percent.
The new year could significantly change the European landscape, as the U.K. prepares to the leave the EU and key elections take place across the continent. The head of the German Ifo Institute told Reuters that Italian voters will eventually demand to quit the euro area.
In the U.K. Prime Minister May asked for unity during her New Year's address on Sunday as the country gets closer to negotiating its terms to exit the EU.
The 35 Russian diplomats that President Barack Obama expelled as part of a wide package of sanctions against Russia have left the country, Reuters reported. However, the incoming White House press secretary, Seam Spicer, told Reuters the decision to punish Russia may have been "disproportionate."