European markets closed in positive territory on Monday as investors reacted to comments from the head of the Federal Reserve on the U.S. central bank's policy-tightening path.

The pan-European provisionally Stoxx 600 index closed 0.5 percent higher, with all sectors in positive territory. In the U.K., markets are closed due to a bank holiday.

Looking across the benchmark, Germany's Metro Group was the top performer, after Ceconomy said it was in talks to sell most of its 10 percent stake in the German wholesale retailer. Shares of Metro Group closed 12 percent higher.

Markets reopened in Turkey following a week-long holiday. The Turkish lira weakened 3 percent Monday amid continued concerns over the country's economy. Traders remained cautious about risks facing the country, which is engaged in a standoff with the U.S. over detained American pastor Andrew Brunson.

Meanwhile in Asia, equities lifted as China's central bank, the People's Bank of China (PBOC), reintroduced a policy adjustment called the "counter-cyclical factor," aimed at keeping the yuan's daily midpoint fixed to a relatively stable value. The move is seen as an attempt to support China's currency amid accusations from President Donald Trump that it is a "currency manipulator."

Market players also monitored news from Friday that Federal Reserve Chair Jerome Powell sees "further, gradual" rate hikes ahead.

Powell said at the Jackson Hole Symposium in Wyoming that the central bank would likely continue with its policy tightening if the economy continued to strengthen. Powell last week came under fire from Trump for the second time, saying in an interview with Reuters that he was "not thrilled" by the central bank's raising of rates.

In geopolitical news, the U.S. is to impose sanctions on Russia on Monday, in solidarity with the U.K. over allegations Moscow was involved in the poisoning of former Russian spy Sergei Skripal and his daughter Yulia.

Meanwhile, traders were once again given a surprise from Tesla Chief Executive Elon Musk, after the billionaire announced on Friday a halt to his plan to take the electric car maker private. Tesla's stock was hit with a rout after Musk tweeted his intention to take the company off the stock market earlier this month.

In corporate news, Fidessa Group and Sirius Minerals reported results on Monday.

Markets stateside opened on a positive note and Nasdaq hit 8000 points for the first time as the United States and Mexico reached a trade deal, paving the way to replace NAFTA.

The Dow Jones Industrial Average rose 159 points as Caterpillar outperformed. The gained 0.5 percent to hit a record high with tech as the best-performing sector.