The food and beverage sector <.SX3P> was among the top gainers, while Bayer's 1.4% rise helped the healthcare index <.SXDP> climb 0.9%.

Bayer's gain, which also lifted peers in the chemical sector <.SX4P>, was spurred by the company saying a pending U.S. lawsuit over claims related to glyphosate-based herbicide Roundup has been delayed until further notice.

Tracking a rise in oil prices, energy stocks <.SXEP> were also among the biggest sectoral gainers on the day. [O/R]

The pan-European STOXX 600 index <.STOXX> closed up 0.7%, after it tumbled 3% last week on tensions over a possible transatlantic trade war and a spate of weak U.S. and European data.

Germany's DAX <.GDAXI> erased early losses to end 0.7% higher, while Spain's IBEX <.IBEX> rose almost 1%.

"The rather weak macro data last week has increased expectations of further interest rate cuts, especially in the U.S... and are supporting equity markets," said Ingo Schachel, head of equity research at Commerzbank.

The inflow of poor economic prints continued on Monday, as data showed German industrial orders in August fell slightly more than expected, underscoring concerns of a recession in Europe's largest economy.

Market participants were also watching for higher-level China-U.S. trade talks set to begin on Thursday. A report said that Chinese officials are increasingly reluctant to agree to a broad trade deal with the United States.

"Markets are going to be bit more reluctant to position strongly ahead of trade talks than on previous similar occasions, given that hopes of a quick agreement have disappointed a few times," Schachel said.

Among individual stocks, Austria's AMS slipped 0.9% after the company said it failed in its 4.5 billion euro ($4.9 billion) takeover attempt of German lighting group Osram. Osram was down 3.3%.

French video game maker Ubisoft dropped 5.5% to the bottom of STOXX 600 on weak reviews of its newly launched game, Ghost Recon.

Chemicals giant BASF rose 1.3%. The firm said it would invest 20 million euros in Quantafeul, a specialist for pyrolysis of mixed plastic waste and purification of pyrolysis oil.

Investors will also be looking at developments around the crucial talks between London and Brussels this week on the Brexit withdrawal deal, with a looming make-or-break Brexit summit on Oct. 17 and 18, and the Britain's EU departure set for Oct. 31.

(Reporting by Medha Singh and Susan Mathew in Bengaluru; Editing by Bernard Orr and Ed Osmond)

By Susan Mathew