Most European stocks edged up in the opening minutes of trade as positive US earnings reports, Chinese industrial profit figures and European outlook eased global economic concerns.
The UK's FTSE 100 rose 0.1 percent while Spain's IBEX was up 0.3 percent. France's CAC-40 rose 0.2 percent, while Italy's FTSE MIB added 0.4 percent.
In Germany, the DAX remained little changed. The FTSEurofirst 300 index covering the region's top shares fell 0.1 percent to 1,174.07.
The pound fell to a 5-month low against the dollar at $1.5717 while the single currency eased moderately, trading at about $1.34.
Asian markets had ended mixed earlier amid Chinese industrial profits optimism and the yen's extended weakness against the dollar.
The Japanese benchmark Nikkei ended 0.94 percent lower to 10824.31 while South Korea's KOSPI was down 0.36 percent to 1939.71. In China, the Shanghai Composite Index gained 2.41 percent to 2346.51 while Hong Kong's Hang Seng was up 0.40 percent to 23674.62 towards close. Australian markets remained shut for a holiday.
The US corporate earnings season is set to continue this week. Results from the internet giant Yahoo and earth-moving equipments maker Caterpillar are expected later in the day. US Core Durable Goods Orders data is also set for release during the day and analysts expect positive figures following the recent rebound in the country's manufacturing sector.
Wall Street had closed the previous week higher with the S&P 500 index touching its highest point in about eight years. European shares had also climbed in the previous week, with the German benchmark DAX hitting a five-year peak on improved business confidence and optimistic eurozone recovery comments from Mario Draghi.
Italy is looking to sell bonds worth between €3 and €3.5bn (£2.5-3bn; $4-4.7bn) during the day. The outcome of the sales could be considered an indicator of investor sentiments towards the country.
Chinese economic outlook received another boost over the weekend as official data released by the country's statistics bureau showed that industrial profits rose 17.3 percent year-on-year in December. Although this was less than the 22.8 percent reported in November, it was the third highest rate posted in the whole of 2012. The upbeat data pulled the Shanghai Composite Index up into the green for the first time in three days.
The yen's weakness once again dominated Japanese markets. The dollar hovered around the 91 yen mark, boosting export-oriented firms and propelling the Nikkei to briefly hit the 11000 mark before easing.
Japanese economic concerns have seen a modest ease, mainly due to the weak yen and the country's newly elected government's stimulus promises. This month the administration approved a 10.3tn yen stimulus package to boost growth and improve the labour market. The Bank of Japan, for its part, raised inflation targets to 2 percent and took up an open-ended asset purchase programme.
These measures prompted Japan's Cabinet Office to forecast a real growth of 2.5 percent in the fiscal year starting April 2013, in its report released early in the day. Independent analysts are also optimistic on the country's outlook, suggesting that Japan may be recovering from its technical recession.
Corporate earnings news also impacted Japanese investors' appetite for risk in the day. Shares of industrial robots maker Fanuc closed 5.83 percent lower after the company slashed its operating profit for the year. Advantest Corp was down 4.92 percent after a Nikkei report forecast weak performance from the company.
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