The British and German stock markets hit record peaks Monday on hopes that eurozone quantitative easing stimulus, due to be outlined later this week, will bolster economic growth.

Investor sentiment was also given a shot in the arm after China cut interest rates over the weekend for the second time since November, but by afternoon the markets turned down.

London's benchmark FTSE 100 index reached 6,974.26 points in morning trade, its highest intra-day level on record.

In afternoon trading it stood at 6,933.87 points, down 0.18 percent from Friday's closing level, despite data showing that growth in Britain's manufacturing sector had surged to a seven-month high in February.

Meanwhile, Frankfurt's DAX 30 index rallied to an all-time peak at 11,455.08 points. It later stood at 11,391.73 points, a drop of 0.18 percent from Friday.

In Paris, the CAC 40 fell 0.94 percent to 4,904.95 points.

"It was a bright start to March, with the promise of ECB QE and a string of strong data pushing the DAX and the FTSE to new intra-day highs," said Spreadex analyst Connor Campbell.

"The FTSE was able to bask in the eurozone glow whilst also feeling the upshot of its own positive data."

This Thursday, the European Central Bank (ECB) will unveil the details of the bond purchase programme it is kicking off this month.

Greece is also likely to be at the top of the agenda, following the recent eurozone deal to extend aid to the debt-wracked country.

Ahead of the meeting, official data showed Monday that the eurozone remained mired in deflation territory in February for the third month in a row.

Consumer prices in the 19-nation eurozone were down 0.3 percent in February, easing slightly from a 0.6 percent drop in January.

"The ECB announced an open-ended quantitative easing program in January, which we should get more details of on Thursday with the program due to begin this month," said currency analyst Craig Erlam at trading firm Oanda.

"Whether this will be enough to drag the region out of a deflationary spiral remains to be seen, but with unemployment so high and the deflation being so broad-based ... the ECB has a massive job on its hands."

At its first meeting of the year last month, ECB chief Mario Draghi announced a programme to buy 60 billion euros of private and public bonds each month starting in March 2015 until at least September 2016 in a bid to ward off deflation.

In a deflationary spiral, businesses and households delay purchases, throttling demand, triggering recession and causing companies to lay off workers.

The Frankfurt-based ECB's decision-making governing council will hold its meeting on Thursday in Nicosia, Cyprus.

Meanwhile in foreign exchange activity on Monday, the euro climbed to $1.1228 from $1.1195 late in New York on Friday.

"The euro has found some support today on the back of mostly stronger-than-expected eurozone data," said analyst Fawad Razaqzada at traders Forex.com.

"Although the single currency bloc remained in deflation for the third time last month, the 0.3 percent year-over-year drop in the consumer price index (CPI) was a sharp improvement from the 0.6 percent reading in January and beat expectations of a 0.5 percent decline."

Across in Asia, markets rose Monday after the People's Bank of China on Saturday cut interest rates by 25 basis points, citing "historically low inflation" among the factors behind its decision.

The move is the latest aimed at helping the economy regain its lustre after it grew in 2014 at the slowest pace since 1990. Last month the central bank cut the percentage of funds that banks must hold in reserve to try to boost lending.

Shanghai added 0.79 percent and Hong Kong advanced 0.26 percent.

Tokyo climbed 0.15 percent, Seoul gained 0.55 percent and Sydney rose 0.51 percent.

Wall Street stocks opened higher Monday following merger announcements.

Five minutes into trade, the Dow Jones Industrial Average was up 0.18 percent to 18,165.77 points. The broad-based S&P 500 added 0.10 percent to 2,106.52, while the tech-rich Nasdaq Composite Index rose 0.28 percent to 4,977.22.

The biggest deal was NXP Semiconductor's $16.7 billion purchase of Freescale Semiconductor, linking two big manufacturers of chips used in cars. NXP jumped 14.4 percent, while Freescale gained 9.4 percent.