EU Stocks Close Higher in Thin Trade; Boosted by Fiat

European stock markets kicked off the week with gains, rebounding from last week's losses. Volumes were light, however, with U.K. and U.S. markets shut for public holidays.

The pan-European Stoxx 600 index closed higher on Monday, with both the German DAX and the French CAC clocking up gains. However, Milan's FTSE MIB was the strongest gainer of the major European indexes, closing up around 1.55 percent.

However, gains were capped following a weak handover from Asian and U.S. markets. Japanese stocks experienced their third day of volatile trade on Monday, with the benchmark Nikkei index tumbling 4 percent, before paring losses.


Romans Go to Polls Once Again

Rome's citizens went to the polls on Sunday to elect a new mayor for Italy's capital, in a vote which some fear could have repercussions for Prime Minister Enrico Letta's newly installed government. Polls shut on Monday afternoon.

China and the European Union held informal discussions on Monday to try to clear up their trade differences. This follows tussles over solar panels and wireless equipment, which Brussels accuses Beijing of dumping in Europe.

German firm SolarWorld, which has been leading the push to get the European Commission to investigate dumping allegations, closed over 2 percent down following German Chancellor Angela Merkel's pledge to China to do everything in her power to avoid punitive tariffs on Chinese solar panels.

While Beijing fights with the EU on one hand, it has inked a free trade agreement (FTA) with Switzerland on the other. The FTA is China's first deal with a major Western economy.

(Read More: China to Cut Import Duties on Swiss Watches)

Fiat Shares Surge

Fiat shares closed around 7.75 percent higher on Monday, after the Wall Street Journal reported the company was close to securing funding for a buyout of its stake in U.S. automaker Chrysler.

(View More: Fiat Getting Closer to Chrysler Deal)

Shares in Club Mediterrane (Club Med) surged 24 percent, after its top shareholders, AXA Private Equity and Chinese investor Fosun International, said they planned to offer to buy the French holiday group, alongside the company's management.

(Read More: Club Med Shares Surge 24% After Takeover Offer)

Meanwhile, the Financial Times reported that European Union officials are investigating Apple for anti-competitive iPhone sales tactics.

(Read More: Brussels Probes Apple's iPhone Tactics)

The week ahead holds plenty of risk event with euro zone confidence measures released on Thursday. Attention is expected to fall on Italy as the nation holds three bond auctions this week - this comes after Spanish five-year yields rose to an eight-week high last week.