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Frankfurt - European share markets began the trading week on an upbeat note on Monday as the momentum from the breakthrough in the euro debt crisis at last week's EU summit continued to underpin investor confidence.
While the eurozone's blue-chip Stoxx 50 index rose 1.34% to 2,295.03 points in morning trading, the euro slipped 0.14% to $1.2555 and borrowing costs for Spain edged up.
The yield on Spanish 10-year bonds climbed to 6.34% from 6.33%. At the same time, the risk premium measuring the difference with German bonds rose by five basis points to 480 basis points.
Analysts were cautious about Friday's strong gains in the euro as representing a change in direction for the common currency, which has recently come under pressure amid mounting concerns about the eurozone's outlook.
"We can still not speak a change in the trend," wrote the foreign exchange analysts from Germany's Helaba bank in a note to clients.
Monday's increase in European stocks also followed the release of better-than-expected manufacturing indicators from Asia's two biggest economies - Japan and China.
However, Asian investors appeared to take the indicators in their stride with stocks markets in Japan and China ending the day barely changed.
Monday's share market performance came after a good week for global shares with the Stoxx 50 index up 7.7% on the week after European leaders agreed to a series of short-term measures to address the eurozone debt crisis.
The pickup in European shares also came ahead of this week's meeting of the European Central Bank with analysts expecting the Frankfrurt-based bank to announce a rate cut to help spur growth in the eurozone.
