Stocks in Europe swung into the green on Monday afternoon after Ursula von der Leyen, the head of the European Commission, signalled that the EU may open its borders to non-essential travel from the US this summer.
It came after a muted start to the day as investors also monitored the headlines out of Asia concerning the coronavirus pandemic and its possible impact on economies.
"The EU decision to allow US vaccinated travellers does highlight a gradual willingness to wake international air travel from its drawn-out slumber," said IG senior market analyst, Joshua Mahony.
It came as the number of new COVID-19 infections in India hit a fifth consecutive daily record of 352,991, weighing on sentiment on Monday morning. Overall, some 190,000 people have died from coronavirus in the country, while more than 16.6 million have been infected.
The outbreak is now so severe that hospitals are running out of oxygen and beds, and many who have been taken ill are being turned away.
"India's situation dominated the weekend press, but across Japan, South Korea and Thailand and others in between, COVID-19 is undermining confidence in cyclical recovery that many, including the author, has priced into their H2 2021 outlooks," said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA.
"In all honesty, it is much too soon to draw conclusions on this scenario, although we will have a much better picture, I believe, in a few weeks as the situation evolves."
UK prime minister Boris Johnson, who is looking to secure a post-Brexit trade deal with India, has been forced to cancel a planned trip there this week. He will meet with President Narendra Modi virtually instead.
Investors have embraced strong manufacturing data in America, which hit record highs, shrugging off previous concerns about potential higher US taxes on capital gains under the Biden administration.
The US dollar slipped to a two-month low against a basket of major currencies.
However, Richard Hunter, head of markets at Interactive Investor, said: “Investors will be on high alert as an abundance of data drops from all angles this week.
“Quite apart from a raft of corporate earnings with the tech sector being in particular focus, the latest US GDP reading is expected, while the Federal Reserve meeting could provide further clues on the economic direction they are anticipating.
“The data will follow on from more strong readings in factory activity and new housing sales which helped the S&P 500 to another record closing high on Friday."
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MSCI's broadest index of Asia-Pacific shares outside Japan jumped 0.46% to surpass critical chart resistance of 700 points - its highest since 18 March.
The index has had a strong run of late as it clocked its second consecutive weekly rise on Friday and was on track for another month of gains. Since April 2020, the index has offered positive returns in all but three months.
Japan's Nikkei (^N225) reversed early losses to be up 2.17%.
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