Both the pan-European STOXX 600 index and Germany's DAX reached record highs before paring some gains. The MSCI All-Country World Index, which tracks shares across 47 countries, was flat on the day.
Also whetting risk appetite was an announcement by China's finance minister on Sunday that Beijing would roll out tax and fee cuts. Fears about the jolt to the world economy from the coronavirus lingered, though, as the number of reported new cases in China rose to 2,048 as on Sunday from 2,009 the previous day.
Japan's Nikkei fell 0.7% after its economy shrank at the fastest pace in almost six years in the December quarter. The slowdown in the world's third-largest economy came amid concern the coronavirus effects will hurt output and tourism, stoking fears Japan may slump into recession. Talk of a middle class tax cut and a proposal to encourage Americans to invest in stocks boosted equity markets late last week, Betashares chief economist David Bassanese said.
Later in the week, flash manufacturing activity data for February are due for the euro zone, the United Kingdom and the United States. They are likely to capture some of the early impact of the viral epidemic.