The pound gained solidly versus the dollar and euro, as British MPs prepared for a fresh round of votes on various options to try and break the Brexit deadlock.
On the corporate front, shares in EasyJet dived 8.3 percent to £10.24 after the British no-frills airline said that uncertainty surrounding Brexit and the economic outlook is hitting demand for air travel.
Investors reacted also to news that inflation in the eurozone slowed to 1.4 percent in March amid worries that its economy is losing steam.
"The Chinese manufacturing sector has been under the microscope... as a weekend of positive news for the sector helps drive markets higher," said Joshua Mahony, senior market analyst at IG trading group.
"Four months of stagnant and negative growth in the manufacturing sector has understandably hit sentiment globally, given the impact Chinese business has upon global growth.
"Thus it comes as no surprise to see the optimists come out in force today" after the strong figures.
The Purchasing Managers Index for March showed growth in the Chinese manufacturing sector that was far better than expected.
"The manufacturing print... will go a long way to allaying slowdown fears about China, at least in the short-term as the US-China trade talks move back to Washington this Wednesday," said OANDA senior market analyst Jeffrey Halley.
Top negotiators from the world's two biggest economies flagged progress in last week's discussions in Beijing on the tariffs row ahead of this week's talks.
While there have been few details, the general view on trading floors is that the economic superpowers are heading towards a deal that will end a long-running spat that helped sink global markets towards the end of last year.
And confidence that an agreement will be reached helped overcome concerns about the world economy that saw a sharp sell-off in equities at the start of last week.
Beijing announced it would extend a delay on imposing tariffs on US cars, while also adding extremely strong painkiller fentanyl to a list of controlled substances, two key concessions to Washington that have added to hopes for the trade deal.