European stocks rallied Monday morning, after President Donald Trump and President Xi Jinping negotiated a temporary truce to their trade conflict over the weekend.

The pan-European Stoxx 600 was up more than 1.6 percent during mid-morning deals, with almost all sectors in positive territory. Germany's DAX index led the gains among the major bourses, surging around 2.5 percent Monday morning.

Europe's basic resources stocks — with their heavy exposure to China — jumped almost 5 percent as investors reacted to a cease-fire on tariffs between Washington and Beijing. Antofagsta, Glencore and Anglo American were all trading more than 6 percent higher on the news.

Meanwhile, autos stocks rose over 4 percent higher Monday morning. The sector has suffered significant losses year-to-date amid heightened fears of tariffs and slowing growth in car sales. But, a deal preventing an escalation in the global trade war pushed every European carmaker into positive territory. Faurecia, Valeo and Daimler were the top performers, all trading more than 7 percent higher.

Looking at individual stocks, Netherlands-based pharmaceutical company Argenx rose toward the top of the European benchmark. Shares of the group soared 10 percent after Argenx announced it would enter an exclusive global collaboration and license agreement with Cilag, an affiliate of Jansen. The deal is reported to potentially be worth $1.6 billion.

Dutch company Signify slipped to the bottom of the index, after J.P. Morgan revised its stock recommendation to "underweight" Monday morning. Shares of the Amsterdam-listed stock were down more than 5 percent.