“Sentiment rebounded mid-day, with European shares turning positive and Wall Street opening narrowly higher after bond yields slipped back from earlier highs,” said analyst Jasper Lawler at London Capital Group.
The rate of return on 10-year US treasury bonds touched 3.0% before falling back.
“A breakout beyond three% in treasuries is a psychological line in the sand for many institution investors allocating money between bonds and equities,” said Lawler.
London stocks closed with gains of more than 0.4% at 7,398.87 points, while Frankfurt trailed with a gain of nearly 0.3% at 12,572.39 points and Paris’ CAC 40 closed 0.5% up at 5,438.55 points. Meanwhile, the EURO STOXX 50 closed 0.6% higher at 3,514.57 points.
The Dow was 0.2% higher in late morning trading in New York.
European indices had earlier been knocked lower by news that business activity in the eurozone continued to grow at a lacklustre pace in April, bringing fresh doubt on the strength of the economic recovery in Europe.
Data monitoring company IHS Markit flagged a slight slowdown in France, where strikes were interrupting a resurgence unleashed by government reforms.
Powerhouse Germany was also off strong activity seen earlier in the year.
But a weak euro and pound are generally supportive of European exporters, and European indices turned positive as the opening of trading on Wall Street approached.
The major European indices are now trading at or near their highest levels since early February.
“An easing of geopolitical tension has also helped on the margins, on reports that US Treasury Secretary Steve Mnuchin might be heading to China to thrash out some form of truce on trade with Chinese officials,” said Michael Hewson, chief market analyst at CMC Markets UK.
Also helping ease tensions was a declaration Saturday by North Korean leader Kim Jong Un that his country would halt nuclear tests and intercontinental missile launches ahead of a planned summit with US President Donald Trump Earlier, Asian stock markets largely closed lower, with technology firms extending last week’s sharp losses as investors fret over the future of the once-lucrative smartphone sector, traders said.
Meanwhile, oil prices fell back from 3.5-year highs struck last week on comments by Saudi Energy Minister Khaled al-Faleh on Friday that the global market has the capacity to absorb higher prices.
Saudi Arabia and Russia had also said at an Opec meeting in Jeddah that they would press on with a production cap deal to defend higher prices.
Focus this week is also on a slew of US data, including economic growth and personal consumption.
