European shares have risen to record highs, soothed by reassurance from Federal Reserve officials that monetary stimulus won't be clawed back anytime soon.
Sentiment in Europe was also underpinned by the latest IFO indicator which showed that the upswing for the German economy, Europe's largest, is picking up pace after the knock from COVID-19.
A multi billion-euro takeover deal combining two of Germany's biggest property developers was a focus. Vonovia slipped 4 per cent on news it was taking over rival developer Deutsche Wohnen, whose shares surged over 15 per cent, for about 18 billion euros.
The STOXX index of leading European shares gained 0.3 per cent to 446.57 points after hitting a new record high of 447.01.
The mood has turned optimistic again with less concern over whether the US Federal Reserve would begin tapering bond purchases, said Giles Coghlan, chief currency analyst at HYCM.
"The US personal consumption data on Friday is going to be the first major test about whether the Fed is going to see inflation as transitory," Coghlan said.
"We have this constant game of cat and mouse. At some point tapering is going to come."
For now, James Bullard, president of the St. Louis Federal Reserve, put to rest tapering worries.
"I think there will come a time when we can talk more about changing the parameters of monetary policy, I don't think we should do it when we're still in the pandemic," Bullard said on Monday.
Other Fed officials Raphael Bostic and Lael Brainard also had soothing words on inflation.
Reassurance on inflation and Bitcoin's steadier footing after recent big losses helped to push Wall Street's VIX "fear gauge" to below 20 on Monday, near its long-term average, Coghlan said.
US stock futures, the S&P 500 e-minis, were up 0.3 per cent, pointing to a steady open on Wall Street.
China's major state-owned banks were seen buying US dollars in a bid to curb fast yuan appreciation.
In Asia, the region's main regional equity gauges climbed with MSCI's broadest index of Asia-Pacific shares outside Japan up 1.5 per cent at a two-week high.
"Markets were buoyed as data flow didn't live up to the strong-inflation narrative, and amid repeated guidance from senior central bank figures that the current rise in inflation is temporary," ANZ analysts wrote in a note.
Australian shares rose 0.9 per cent to a two-week high. Japan's Nikkei stock index jumped 0.6 per cent, boosted by heavyweight local technology stocks, though gains were contained by worries of a sluggish economic recovery due to slow vaccine rollouts in the country.
Chinese stocks in particular hit a 2-1/2-month high on financial services and consumer gains. The blue-chip CSI300 index jumped 3 per cent, while the benchmark Shanghai Composite Index advanced 2.4 per cent, reaching their highest levels since early March. Hong Kong's Hang Seng index rose 1.43 per cent.
"As China's economic recovery continues and commodities prices start to stabilise, that would help ease inflation worries and repair investor sentiment," said Hong Hao, head of research at BoCom International.
On Monday the Dow Jones Industrial Average rose 0.54 per cent while the S&P 500 and the tech-heavy Nasdaq Composite gained 0.99 per cent and 1.41 per cent, respectively.
Treasury yields, which fell on Monday after a few Fed officials affirmed their support to keep monetary policy accommodative for some time, were little changed. The yield on benchmark 10-year Treasury notes was at 1.5978 per cent.
Digital currencies bounced back on Monday following last week's crypto rout, regaining ground lost during a weekend selloff on news of China's clampdown on mining and trading of cryptocurrencies.
After shedding 13 per cent on Sunday, Bitcoin, the world's largest cryptocurrency, was last down 0.3 per cent at approximately $38,707.
The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, edged down to 89.625. The European single currency was up 0.3 per cent on the day at $1.2252, having gained 1.72 per cent in a month.
US crude eased 0.38 per cent to $65.81 a barrel. Brent crude fell 0.3 per cent to $68.27 per barrel.
Gold was slightly lower. Spot gold traded at $1,880 per ounce.