More than an hour into trading, the major averages are in the red. The France's CAC 40 is falling 0.15%, while Germany's DAX is down 0.06%.

Hectic activity on the M&A front propelled markets higher on Friday. A rally in mining stocks on the back of rising metal prices also supported the upward momentum. Further, the benchmarks extended their gains after a report showed that the U.S. economy added the fewest jobs last month in two years, increasing chances the Federal Reserve will lower interest rates.

The U.K.'s FTSE 100 index surged 1.01% to 6,603.70, while France's CAC 40 index climbed 1.08% to 6,068.83 and Germany's DAX index rose 0.54% to 7,516.76.

On Wall Street, markets saw some strength during trading on Friday, with traders reacting positively to the April employment data. Though buying interest was somewhat subdued, the major averages all ended the session in positive territory.

The Dow Jones Industrial Average closed up 23.24 at a new record closing high of 13,264.62, while the Nasdaq closed up 6.69 at 2,572.15 and the S&P 500 closed up 3.23 at 1,505.62. The Nasdaq and the S&P 500 set new 6-year closing highs.

US markets turned stronger Friday morning after the release of the Labor Department's report on employment in the month of April, which showed that job growth slowed to its weakest pace since November of 2004.

While the weaker than expected job growth added to existing concerns about the strength of the world's largest economy, the report also showed only modest wage growth. The data added to recent optimism that the Federal Reserve might lower interest rates in the near future.

The markets also benefited from some merger-and-acquisition news, including reports that said Microsoft has intensified its pursuit of an agreement to acquire Yahoo in a deal that could be worth $50 billion. Reuters also moved sharply higher after the news service confirmed that it has received a preliminary approach from a third party that could lead to an offer for the company. Shares of Reuters closed up 26.9%, at their best closing level in over five years.

Markets across the Asia-Pacific moved higher in Monday's trading, largely in response to upbeat corporate results. Mining stocks led to the upside. The Chinese market remained closed on account of a public holiday.

The Tokyo benchmark Nikkei stood 1.58% higher at closing, while Australia's All Ordinaries gained 1.48%. Hong Kong's Hang Seng moved up 1.72%, while South Korea's Seoul Composite added 1.07%. India's Sensex is up 0.62%.

Heavily weighted oil stocks may see weakness against the backdrop of falling oil prices. Early Monday, oil prices slid below US$62 a barrel on lingering concerns over sluggish outlook for crude demand. On Friday, the price of oil ended the session at a two-week closing low. Crude for June delivery closed down $1.26 at $61.93 a barrel after closing lower in the four previous sessions.

Mining stocks may see upside tracking record high prices of copper and nickel.

Characteristic of a Monday, merger and acquisition arena is abuzz with news.

ABN Amro is set to move after the Dutch bank rejected a $24.5 billion offer for its US unit, LaSalle, from the Royal Bank of Scotland Group Plc, Santander Central Hispano SA and Fortis. ABN Amro disclosed that the offer is not superior to the $21 billion bid tabled by the Bank of America earlier.

KarstadtQuelle AG may witness trading on a media report that the department store chain is mulling a spin-off its information technology services unit. The company is reportedly nearing completion of a sale deal for its Itellium Systems and Services unit to the US-based Electronic Data Systems Corp.

Merck KGaA is likely to move after a media report said Teva Pharmaceutical Industries Ltd. is bidding in excess of EUR4.5 billion to acquire Merck KGaA's generic-drug unit.

Major stocks expected to move on earnings and related news is Publicis Groupe and Tenaris SA.

European macroeconomic newsflow is set to gain steam mid-week. Thursday is expected to be the busiest with two central bank decisions dominating the scene.

The Bank of England - BoE Monetary Policy Committee is slated to announce its interest rate decision on Thursday. Markets have already priced in a quarter point hike this time as the CPI annual inflation accelerated to a record high of 3.1% in March from 2.8% in the prior month. The Bank of England hiked key interest rate thrice since August last year, taking the official bank rate to 5.25%.

The Government's target measure of inflation surged past the official benchmark of 2%. Further, the number topped the sensitive level of 3%, forcing the central bank chief Mervyn King to pen an explanatory letter to the Chancellor Gordon Brown. Some analysts opine that the solid first quarter GDP growth numbers, released late April, may signal further monetary tightening after a hike in May.

Elsewhere, the European Central Bank is widely expected to stay pat on interest rates on Thursday. The ECB may hold the main refinancing rate at 3.75%, while the ECB chief Jean-Claude Trichet is expected to signal a hike in June with his code words - "strong vigilance". Trichet commented in the press meet that followed April decision that he would do nothing to alter market expectations for two months ahead, meaning he was comfortable with market expectations.

Most traders are also likely to be focused on the Federal Reserve this week, as the Fed is scheduled to announce it latest decision on interest rates after a meeting on Wednesday. The Fed is widely expected to leave rates unchanged for the seventh consecutive time.

US economic data is also likely to attract some attention, with reports on wholesale prices, retail sales, the trade deficit, business inventories, and import and export prices among those that are due to be released this week.

Additionally, this week will also see the release of quarterly results from companies like Cisco Systems, Disney, Tyco, Electronic Arts, TXU Corp., Barr Labs, AIG and Sara Lee.