Hong Kong's Hang Seng Index closed with a gain of 2.2 percent, fuelled by the share price of Chinese ecommerce giant Alibaba soaring almost 20 percent on bumper results which included a surge in AI revenue.

Chinese equities won support also from official data showing that China's factory output ticked up in August, analysts said.

The Purchasing Managers' Index -- a key measure of industrial output -- was 49.4, up slightly from 49.3 in July.

However, it was also a fifth straight month of contraction, as only a figure above 50 indicates growth.

In Europe, the London edged higher Frankfurt stock markets gained 0.6 percent.

Paris flattened amid political turmoil in France over contested budget proposals.

Wall Street was shut Monday for Labor Day, while the dollar traded mixed against main rivals.

"Stocks tend to underperform this month on both sides of the Atlantic," noted Kathleen Brooks, research director at XTB trading group.

The tide already began to turn at the end of last week, with "an underwhelming set of results for (AI chip giant) Nvidia, along with a sharp selloff in stock markets in Europe and the US", Brooks added.

Wall Street retreated from record highs Friday as a key US inflation reading accelerated, lowering the odds of sustained cuts to interest rates by the Federal Reserve in the coming months.

However, Trade Nation analyst David Morrison said investors interpreted last week's dip "as simply some mild profit-taking ahead of the long holiday weekend".

Also Friday, a US appeals court ruled that many of President Donald Trump's tariffs, which have upended global trade, were illegal -- but allowed them to remain in place for now, giving him time to take the fight to the Supreme Court.

- Key figures at around 1530 GMT -

London - FTSE 100: UP 0.1 percent at 9,196.34 points (close)

Paris - CAC 40: UP less than 0.1 percent at 7,707.90 (close)

Frankfurt - DAX: UP 0.6 percent at 23,037.33 (close)

Tokyo - Nikkei 225: DOWN 1.2 percent at 42,188.79 (close)

Hong Kong - Hang Seng Index: UP 2.2 percent at 25,671.78 (close)

Shanghai - Composite: UP 0.5 percent at 3,875.53 (close)

New York - Dow: Closed for a public holiday

Euro/dollar: UP at $1.1705 from $1.1693 on Friday

Pound/dollar: UP at $1.3547 from $1.3507

Dollar/yen: UP at 147.27 from 147.01 yen

Euro/pound: UP at 86.57 pence from 86.56 pence

Brent North Sea Crude: UP 1.0 percent at $68.16 per barrel

West Texas Intermediate: UP 1.0 percent at $64.67 per barrel

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