David Madden at CMC Markets said some positive noises on progress in the US-China trade stand-off helped sentiment and even if the Brexit extension "wasn't a surprise... the confirmation encouraged some buying."
Wall Street edged up to new highs on the China lead, lending some limited support to the European markets which closed with slight gains.
Investors were looking ahead to a US Federal Reserve meeting that could produce another interest rate cut Wednesday, along with a host of economic data and results from the majors such as Apple, General Motors and Exxon Mobil.
Iconic jewellers Tiffany soared 29 percent after it confirmed receiving a bid from French luxury goods giant LVMH valuing it $14.5 billion.
EU extends Brexit deadline
European Union states on Monday agreed to postpone Brexit for up to three months, stepping in with a decision less than 90 hours before Britain was due to crash out with no divorce deal.
The next deadline is now January 31 -- although the EU would allow an earlier date should London ratify a withdrawal agreement sooner.
Although the announcement helped the pound, its gains were modest.
"The pound has remained fairly muted off the back of the announcement and it seems as though its position will be largely dictated by general election news over the next few weeks," said Sebastien Clements, currency analyst at OFX trading group.
In a bid to strike a deal as soon as possible, British Prime Minister Boris Johnson is to ask parliament to vote Monday for a snap general election.
But it is likely to fail, with the main opposition Labour party insisting it would not back an election until Johnson's threat of leaving the EU without a deal is completely removed.
"The decision to provide an extension must be seen as a positive thing, given how close we are to a disorderly Brexit," said Joshua Mahony, IG senior market analyst.
"However, while a no-deal has been averted for now, this extension points to more uncertainty and economic decline as businesses remain in the dark over where the country is heading."
Brexit uncertainties are impacting the outlook for HSBC, the British banking giant said Monday, as it posted a fall in third-quarter profits.
Shares in the lender were down more than four percent at one stage, making them the top loser on the FTSE 100 index, but they recovered a few pennies in late trade.
In Asian trade, stock markets climbed after China and the US said they were close to agreeing a mini trade deal.
That also helped Wall Street open higher, with the Dow rising 0.5 percent in the first minutes of trading and the S&P 500 touching another record high.