The pan-European STOXX 600 index rose 0.7%, hitting new highs since February 2020, with mining, auto and travel stocks among the top performers.
Biden is expected to unveil a stimulus package proposal later in the day, designed to jumpstart a pandemic-struck U.S. economy with an economic lifeline that could exceed $1.5 trillion.
Chinese exports grew more than expected in December, data showed, while Germany's economy shrank by a smaller-than-expected 5.0% in 2020 as a strong state response helped limit the havoc caused by the COVID-19 pandemic.
Still, investors were worried the latest coronavirus lockdowns in Europe could further slow a recovery even as vaccination programmes began.
"We came into the year with a view that vaccines will kick in over the first half of the year and economic growth should bounce back materially. Obviously that is more biased to the second half of the year," said Nick Peters, multi-asset portfolio manager at Fidelity International.
"An uncertain start to the year was within our expectations, and as long as we can see mobility data, PMIs beginning to improve over the year, we're going to be comfortable with the risk position that we've taken."
European chipmakers received a boost after Taiwan's TSMC posted a record high quarterly profit due to demand for devices requiring high-end chips.
Semiconductor equipment makers ASMI jumped 7.6% and ASML rose 5.9%, while the wider tech index was up 1.9%.
Finnish telecom network equipment maker Nokia jumped 5.0% after announcing mutiple 5G deals with companies including Alphabet's Google and T-Mobile.
Political worries hit Italy's FTSE MIB, down 0.5%, after former premier Matteo Renzi withdrew his small Italia Viva party from the ruling coalition, sinking Prime Minister Giuseppe Conte's government on disagreements over funding.
Shares in Italian lenders, whose big sovereign bond portfolios makes them sensitive to political risk, fell 0.9%.
"While not our base case, early elections look possible and would likely lead to a new government less aligned with the EU," analysts at Morgan Stanley said in a note.
Carrefour slipped 2.5% after the French government took a tough line against any takeover of the retailer by a foreign company in the wake of a $20 billion bid approach by Canadian convenience-store operator Alimentation Couche-Tard.
Swiss plumbing supplies maker Geberit dropped 5.6% after it revealed a hit to sales from the surge in value of the franc during 2020.
(Reporting by Amal S and Sruthi Shankar in Bengaluru; Editing by Uttaresh.V, Saumyadeb Chakrabarty and Alex Richardson)
By Sruthi Shankar