The European Central Bank meets on Thursday, though it is not expected to begin raising interest rates until July, with rate setters at the US Federal Reserve and Bank of England gathering next week.

"There is still some doubt as to whether or not inflation has peaked," said Michael Hewson, chief markets analyst at CMC Markets.

"We are in a bit in a no-man's land at the moment with respect to peak inflation, and also China reopening and the possible tailwinds that might bring. Oil prices are still a headwind and so it's difficult to gain any direction," Hewson said.

The week kicked off with some investor appetite for risk as the MSCI all country stock index gained 0.3 per cent, its recent rebound from near bear-market territory still largely intact.

The STOXX index of 600 European companies gained 0.8 per cent. Blue chips in London were up 1.2 per cent, shrugging off news that British Prime Minister Boris Johnson is to face a confidence vote by lawmakers from his governing Conservative Party later on Monday.

Oil prices firmed after Saudi Arabia raised prices sharply for its crude sales in July, an indicator of how tight supply is even after OPEC+ agreed to accelerate output increases over the next two months.

Brent was up 0.6 per cent at $120.41 a barrel. US crude rose 0.55 per cent to $119.53 per barrel.

Gregory Perdon, co-chief investment officer at Arbuthnot Latham, said investors have to weigh up bearish factors such as inflation, rising rates, war in Ukraine and a higher dollar against still accommodative monetary policy, good though slowing economic growth and Chinese stimulus.

"I think on balance, I do think that risk taking in this environment is going to be more rewarding than betting against risk assets," Perdon said.

S&P 500 futures added 1 per cent and Nasdaq futures 1.4 per cent, pointing to a higher open on Wall Street.

Shares in Asia-Pacific gained 0.6 per cent, while the Nikkei in Japan rose 0.6 per cent.

Chinese blue chips climbed 1.9 per cent after a survey confirmed service sector activity shrunk in May, but the Caixin index still improved to 41.4 from 36.2.

Sentiment was aided by comments from US Commerce Secretary Gina Raimondo that President Joe Biden has asked his team to look at the option of lifting some tariffs on China.

Markets will be on tenterhooks for the US consumer price report on Friday, especially after EU inflation shocked many with a record high last week.

Forecasts are for a steep rise of 0.7 per cent in May, though the annual pace is seen holding at 8.3 per cent while core inflation is seen slowing a little to 5.9 per cent.

A high number would only add to expectations of aggressive tightening by the Fed, with markets already priced for half-point increases in June and July and almost 200 basis points (bps) by the end of the year.

At the ECB meeting on Thursday, President Christine Lagarde is considered certain to confirm an end to bond-buying this month and a first rate increase in July, though the jury is out on whether that will be 25 or 50 bps.

Money markets are priced for 125 bps of increases by year-end, and 100 bps as soon as October.

The prospect of ECB rates turning positive this year has helped the euro nudge up to $1.0731, some way from its recent trough of $1.0348, though it has struggled to clear resistance around $1.0786.

The euro also made a seven-year peak on the yen at 140.39 , after climbing 2.9 per cent last week, while the dollar held at 130.78 yen having also gained 2.9 per cent last week.

ING Bank said the gradual re-appreciation of the greenback, underpinned by rising US rates, should mostly be to the detriment of currencies with more uncertain growth prospects like most European currencies.

Against a basket of currencies, the dollar stood at 101.87 after firming 0.4 per cent last week.

In commodity markets, wheat futures jumped 4 per cent after Russia struck Ukraine's capital, Kyiv, with missiles, dampening hopes for progress in peace talks.

Gold was stuck at $1,852 an ounce, having held to a tight range for the past couple of weeks.

Australian Associated Press