European shares advanced in early trading on Monday, with oil and gas firms among the strongest performers, as investors started the first full trading week of the new year on a positive note.
The pan-European Dow Jones Stoxx 600 index advanced 1.6% to 207.69.
Oil and gas companies on the move included French oil giant Total up 2.0% while BP shares advanced 1.4%.
The gains for the sector followed another advance for light sweet crude oil futures, with the contract up 47 cents at $46.77 a barrel.
Crude for February delivery ended up $1.74, or 3.9%, at $46.34 a barrel on the New York Mercantile Exchange on Friday, on concerns that Russia's move to cut off natural gas to Ukraine could affect European energy supplies. The ongoing conflict in the Middle East and OPEC's production cuts also helped push oil higher, analysts said. Other companies trading notably higher included Swiss drugmaker Roche Holdings up 2.5%, and Swiss banks UBS up 6.4% and Credit Suisse up 8.2%.
Swiss stocks haven't been trading since Tuesday, and last week UBS sold some Bank of China shares and Credit Suisse reached a deal to sell much of its fund management unit.
On a national level, the U.K. FTSE 100 index climbed 0.9% to 4,601.79, the German DAX 30 index advanced 1% to 5,025.07 and the French CAC-40 index climbed 0.6% to 3,369.33.
Asian markets shot higher Monday after U.S. stocks rallied Friday.
The Dow Jones Industrial Average ended above the 9,000 mark for the first time since Nov. 5 on Friday as investors pondered possible moves by the new administration.
The Wall Street Journal reported that President-elect Obama and congressional Democrats were crafting a plan to offer as much as $300 billion of tax cuts to individuals and businesses.
Meanwhile, German Chancellor Angela Merkel's coalition government is set to begin talks Monday on new fiscal-stimulus measures, but remains divided over possible tax cuts, news reports said.
Automakers were the only Stoxx 600 sector in the red, with shares of German car giant Daimler down 1.1%.
The firm has decided not to buy Swedish-based Volvo Cars from ailing U.S. Ford, according to Der Spiegel.
Porsche shares fell 3.1% after Societe Generale lowered its rating on to hold from buy, saying luxury car sales aren't immune from global turmoil.
"Emerging markets have been Porsche's growth engine but they are now also under severe pressure," the broker said. There's an increasing risk Porsche may overpay for Volkswagen (DE:766400: news , chart , profile ) to achieve full control, it added.
Renault (FR:013190: news , chart , profile ) shares lost 6% as Citi downgraded its rating on the French automaker to sell from hold on fears of slumping car sales and a dividend at risk.
Volkswagen shares fell 2.0%. VW and BMW (DE:519000: news , chart , profile ) are looking to increase their market share in the U.S., according to a report from The Wall Street Journal.
Shares in French retailing giant Carrefour (FR:012017: news , chart , profile ) fell 1.6%. It was cut to neutral from buy at Goldman Sachs, citing a profit warning from the firm last month.
