The pan-European STOXX 600 index rose 0.7% to 475.19, just below its all-time high of 476.16 hit on Aug. 13.
Still, trading volumes were muted throughout the day due to a public holiday in the United States.
After Wall Street's tech-heavy Nasdaq index hit a record high on Friday, European tech stocks jumped 1.7%, with shares in chip equipment maker ASML and Dutch tech investor Prosus providing the biggest boost.
The tech index ended at 829.31 points, its peak so far in 2021 and its highest since December 2000.
Recent uncertainty over monetary policy and rising COVID-19 cases has pushed investors into technology stocks, which have been the best-performing sector through the pandemic.
German stocks rose 1.0% after a rise in July German factory orders boosted sentiment by suggesting there was strong demand for goods from Europe's biggest economy.
Investors are also focusing on the European Central Bank (ECB) meeting this week as some of its hawkish policymakers are calling for it to start paring back bond purchases with inflation surging and the growth in euro zone resilient.
Last week, BofA Securities upgraded its euro area growth and inflation forecasts, predicting the bloc's economy would expand 4.8% this year, up from its previous forecast of 4.2%.
"Our base case scenario is that the ECB will announce a moderation of asset purchases in Q4 amid a solid economic growth backdrop, easier financing conditions, higher inflation forecasts and lower net issuance of government bonds," Unicredit analysts said.
Media and retail stocks were also among the best performing European sectors for the day.
Italian defence group Leonardo gained 2.3% after its chief executive officer said the company still aimed to list its U.S. unit DRS when the right market conditions are in place.
French supermarket group Carrefour rose 1.9% on news that France could ease health pass restrictions that are hurting the activity of large shopping malls.
French engineering group Spie fell 4.3% after it confirmed it had submitted a non-binding offer to buy Equans, the newly created services unit of French energy group Engie.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and David Clarke)
By Sruthi Shankar and Ambar Warrick