China's woes were underlined by surveys showing factory activity slowing sharply in July amid rising costs and extreme weather.

In contrast, Europe's economic recovery outpaced all expectations last quarter, while US consumers spent with abandon in June as coronavirus restrictions eased, a trend likely to ensure a strong payrolls report at the end of this week.

"Surging company profits in the US and lower bond yields are providing support, and in any case the rising trend in shares is likely to remain in place into next year as rising vaccination rates allow economic recovery to continue," said Shane Oliver, chief investment strategist at AMP Capital.

About 89 percent of the nearly 300 recent US earnings reports have beaten analysts' profit estimates. Earnings are now expected to have climbed 89.8 percent in the second quarter, versus forecasts of 65.4 percent at the start of July.

There was also the prospect of more fiscal stimulus ahead as US senators worked to finalize a sweeping $1 trillion infrastructure plan that could pass this week.

The optimism was apparent on Wall Street with S&P 500 futures rising 0.5 percent and Nasdaq futures 0.4 percent. EUROSTOXX 50 futures added 0.3 percent, while FTSE futures gained 0.2 percent.

Asia has not fared so well, with China's crackdown on the tech and education sectors hammering stocks, while the spread of the Delta variant of the coronavirus in the region hit growth.

Read also: Most Asian markets down on China worries after Wall Street drop

MSCI's broadest index of Asia-Pacific shares outside Japan was last up 0.2 percent, having hit its low for the year so far last week.

Japan's Nikkei bounced back 1.6 percent, but that was from its lowest since January. Investors were anxiously watching Chinese blue chips which gained 0.9 percent, after shedding 5.5 percent last week.

"The 10-15-year period where foreign investors were allowed to participate in the walled garden of Chinese high growth stocks was an aberration," said BofA economist Ajay Kapur.

A shift in China's regulatory regime was underway that held implication well beyond the tech sector, he said.

"Regulatory tightening in the world's second largest economy intended to reduce inequality and make housing and goods more affordable is deflationary, something that the many bond bears need to consider."

Equity valuations elsewhere have already been supported by a steady decline in bond yields, with yields on US 10-year notes falling for five weeks in a row to reach 1.23 percent.

That drop combined with surprisingly strong EU economic data out on Friday to lift the euro to $1.1866, away from its July low of $1.1750.

The dollar has also drifted off to 109.67 yen, from its recent top of 110.58, but has support around 109.35. As a result, the dollar index has eased to 92.110, from a July peak of 93.194.

The drop in bond yields and the dollar gave gold a fillip last week but it again faltered at resistance around $1,832 and was last trading flat at $1,811 an ounce.

Oil prices eased on Monday as soft Chinese data undermined the outlook for demand, though that follows four straight months of price gains.

Brent was last down $1.02 at $74.39 a barrel, while US crude lost 91 cents to $73.04.