European shares closed higher on Monday as a soft business activity reading strengthened the case for more monetary policy easing by the European Central Bank this year, with rate-sensitive sectors such as real estate and utilities rising.

A shock decline in the euro zone’s main survey of the private sector economy just gave the European Central Bank a reason to speed up interest-rate cuts — at least in the eyes of investors.

A key segment of the German yield curve has normalized as traders bet the European Central Bank will need to accelerate the pace of interest-rate cuts amid growing concern the region’s economic recovery has run out of steam.

Bitcoin was the notable mover as it reached for one-month highs on Monday, sustaining its rally after the Federal Reserve's super-sized rate cut last week, while the yen and most other major currencies stagnated with Japanese markets on holiday.

The profitability of Europe’s top banks hit a record high just as the European Central Bank cut interest rates for the first time in almost five years.