The Trump-Xi meeting in Japan marked the first time the two leaders had met since the dispute over trade and technology escalated following 11 rounds of negotiations.
While the agreement to resume talks forestalls a worsening in the conflict, it remains unclear whether there will be a resolution. For now, though, investors have breathed a sigh of relief that there may be some progress in the days and weeks ahead.
"The G-20 meeting managed to deliver for markets, as Donald Trump avoided levying any further tariffs and instead laid out a plan to get the U.S.-China trade talks back on track," said Joshua Mahony, senior market analyst at IG. "Sharp gains throughout Asia certainly provided European markets with a guide, while the S&P 500 futures point towards a record high open this afternoon."
Germany's DAX rose 1.1% to 12,542 while Britain's FTSE 100 climbed 1.3% to 7,525. France's CAC 40 gained 0.8% in midday trading to 5,584.
U.S. shares were also set to open higher with Dow futures rising 1.0% to 26,847 and S&P 500 futures gaining 1.1% to 2,977.
Earlier in Asia, Japan's benchmark Nikkei 225 added 2.1% to finish at 21,729.97. Australia's S&P/ASX 200 gained 0.4% to 6,648.10. South Korea's Kospi was marginally lower at 2,129.74. Hong Kong's markets were closed for a holiday. The Shanghai Composite rose 2.2% to 3,044.90.
Despite the positive news on the trade front, the latest data were less upbeat.
A closely watched survey by Japan's central bank, released Monday, showed confidence among major manufacturers in the economy worsened for the second straight quarter.
The Bank of Japan's quarterly "tankan" survey of major companies showed confidence deteriorated in June compared with March, with the main index for major manufacturers fell to 7 in June from 12 in the previous quarterly survey in March.
Meanwhile, another indicator, the purchasing managers' index (PMI) for China's manufacturing sector, remained stable but still in contractionary territory at 49.4 in June, even with May's reading, the National Bureau of Statistics reported.
Readings above 50 indicate expansion, while a reading below 50 reflects contraction.
ENERGY: Oil prices continued to climb as OPEC meets to decide whether to extend its current deal to cut production for six to nine months. The oil cartel faces a weakening demand outlook due to waning global growth. Monday's decision is complicated by tensions between the U.S. and Iran that have sent prices higher. Benchmark crude oil rose $1.52 to $59.99 a barrel in electronic trading on the New York Mercantile Exchange. It fell 96 cents to $58.47 a barrel on Friday. Brent crude, the international standard, rose $1.66 to $66.40 a barrel.
CURRENCIES: The dollar rose to 108.28 Japanese yen from 107.87 on Friday. The euro inched down to $1.1347 from $1.1371.