Britain's FTSE 100 gained 0.3% to close at 7,433.25, while France's CAC 40 gained 0.3% to 6085.95. Germany's DAX added 0.3% as well to end the day at 13,783.89. Wall Street remained closed for Presidents' Day. Futures for the S&P 500 and the Dow Jones Industrial Average edged 0.2% higher in electronic trading.
The Shanghai Composite index jumped 2.3% to 2,983.62 after the central bank and government announced a slew of measures to support the economy as the country battles an outbreak of a new virus that has killed 1,774 people.
The People's Bank of China cut its one-year medium-term lending rate to 3.15% from 3.25%. It also injected some 300 billion yuan ($43 billion) into the markets through short-term purchases of securities and other injections of cash.
Such moves will likely be followed by more, said Julian Evans-Pritchard of Capital Economics, given that many of the companies worst affected by the virus outbreak are smaller ones that lack access to loans from major state-run banks.
The government has also announced plans for tax cuts and other measures to help companies struggling with shut-downs of cities and plunging consumer spending and travel.
"We think the People's Bank of China will need to expand its re-lending quotas and relax constraints on shadow banking in order to direct more credit to struggling (small- and medium-sized companies)," Evans-Pritchard said in a commentary.
The Nikkei 225 index in Tokyo skidded 0.7%, to 23,523.24 after the government reported the economy contracted 6.3% in annual terms in the last quarter.
Analysts said the contraction in the Japanese economy, the world's third-largest, reflected the impact of typhoons, trade tensions and crimped consumer spending after the sales tax rose to 10% from 8% as of Oct. 1. The seasonally adjusted economic data was announced as Prime Minister Shinzo Abe faces pressure over spreading cases of the new viral illness COVID-19 and markets around the region see a mounting toll from its impact on travel and tourism as authorities strive to contain it.
"Consumer spending, which slumped following the tax hike in the fourth quarter of 2019, will now struggle to do anything except contract further in the first quarter as the impact of Covid-19 weighs on consumer sentiment, weighing in particular on the consumer services sector," analysts at ING bank wrote in a report to investors.
"Some further government spending may help to curb any further contraction in GDP beyond (the first quarter of 2020). But that will not stop what started off as a technical downturn from evolving into a full-blown recession," they said.
Elsewhere in the region, Sydney's S&P ASX/200 edged 1% lower to 7,125.10. South Korea's Kospi fell 0.1% to 2,242.17, while the Hang Seng in Hong Kong climbed 0.5% to 27,959.60. India's Sensex shed 0.4% to 41,082.82.
Benchmark U.S. crude oil picked up 7 cents to $52.12 per barrel in electronic trading on the New York Mercantile Exchange. It closed 1.2% higher on Friday, notching its first weekly gain in six weeks. Brent crude oil, the international standard, rose 2 cents to $57.34 a barrel.
The slide in oil prices has weighed on energy stocks. The sector is the biggest loser in the S&P 500, down 10.2% so far this year.
More than three quarters of S&P 500 companies have reported earnings and the results so far show solid growth. Companies are expected to report overall profit growth of just under 1% when all the reports are in, according to estimates from FactSet.
In currency markets, the dollar rose to 109.91 Japanese yen from 109.77 yen on Friday. The euro edged down to $1.0836 from $1.0839.