European shares kicked off the second quarter on an upbeat note on Monday with all major sectors higher following a surprise recovery in China's factory data and signs of progress in trade talks between the world's two largest economies.

At 0715 GMT, the pan-European index had risen 0.8 per cent. While gains spread across all regional bourses, Germany's trade sensitive DAX outperformed with its 1 per cent rise, helped by rising car maker stocks.

PSA Group rose 3.3 per cent and Fiat Chrysler Automobiles gained 2 per cent on a report that the two companies are exploring a partnership to share investments to build cars in Europe.

European chipmakers were another bright spot after better-than-expected results from Apple-supplier Foxconn Industrial. Dialog Semiconductor Plc and Infineon Technologies rose more than 3 per cent each.

Meanwhile, factory activity in China unexpectedly grew for the first time in four months in March, both official and private surveys showed, suggesting government stimulus measures may be starting to take hold.

China's economic data comes on the heels of fresh concerns over a slowing world economy that resurfaced last month after the US Federal Reserve abruptly ended its plans for policy tightening this year. Also on investors' radar on Monday were similar activity surveys out of the euro zone.

Adding to the cheery mood, China's State Council said over the weekend that the country would continue to suspend additional tariffs on US vehicles and auto parts after April 1, in a goodwill gesture following a US decision to delay tariff hikes on Chinese imports.

Denmark's DSV A/S dipped 0.6 per cent after Swiss freight forwarder Panalpina said DSV would buy it in a share swap valued at 4.6 billion Swiss francs ($4.62 billion).

EasyJet slipped 6.2 per cent, among the biggest decliners on STOXX, after the British low-cost airline said macroeconomic uncertainty and many unanswered questions surrounding Brexit were driving weaker customer demand in the market, hurting ticket yields across Europe.

Ryanair Holdings London shares also shed 3.2 per cent.

London's FTSE 100 eked out the smallest gain while the Dublin bourse, often seen as a barometer for Brexit sentiment, rose 0.8 per cent.

Britain's exit from the European Union was in disarray after a third defeat of Prime Minister Theresa May's divorce deal left her under pressure from rival factions to leave without a deal, go for an election or forge a much softer divorce.

Parliament will vote on different Brexit options on Monday and then May could try one last roll of the dice by bringing her deal back to a vote in parliament as soon as Tuesday.

Goldman Sachs expects the balance of risks around Brexit outcomes is tilted towards a softer, longer departure from the European Union, after May's withdrawal agreement was rejected for a third time.

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