European Shares Close Off Highs Ahead of US Earnings

European shares closed off their highs on Monday but remained in positive territory, shrugging off poor investor sentiment data for the euro zone. The pan-European FTSEurofirst 300 closed provisionally up 0.2 percent at 1,163.96 points.

(Read More: Euro Zone Sentiment Dips in April on Cyprus Woes)


Earlier on Monday, Portugal's main court rejected the austerity measures which are central to country's financial aid pressure, highlighting tensions in the euro zone. The Portuguese benchmark index underperformed, closing 1.40 percent down on the day.

"Fiscal austerity in Portugal is failing," Nick Spiro, head of Spiro Sovereign Strategy, told CNBC. "Portugal's 2011 bailout program went off track some time ago. If it were not for the troika's leniency and the dramatic rally in Portuguese debt, the program would have already failed by now."

(Read More: Portugal Fires Warning Shot for Austerity in Europe)

In addition, U.S.Treasury Secretary Jack Lew is in Europe for economic discussions with the region's officials and leaders. Lew is scheduled to travel to Frankfurt this evening where he will meet with European Central Bank President Mario Draghi.

Meanwhile, two of Greece's biggest banks face nationalization after failing to attract private investment, and a surprise move by the state suspended their merger deal.

Drugmaker Novartis was one of the strongest gainers on the FTSEurofirst 300 after BofA Merrill Lynch upgraded the stock to "neutral". Novartis closed 1.8 percent higher and boosted the healthcare sector as a whole, which closed 1.04 percent up.

Investors remained cautious ahead of the start of the U.S. first-quarter earnings season, with the FTSEurofirst 300 trading at just 67 percent of its 90-day average. Alcoa will kick-off earnings season with its report after the U.S. closing bell.