The pace of growth in US manufacturing quickened in October, suggesting a sluggish economic recovery may be gaining some traction, according to an industry report.

China's official purchasing managers index for manufacturing, for October blew past expectations to rise to a six-month high. The benchmark Shanghai Composite Index of shares rose 2.5 percent.

"There's been a lack of good economic news and this is certainly helpful with the market particularly up here and earnings expectations remaining high," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co. in Nashville.

MSCI's all-country world stock index rose 0.77 percent. The pan-European FTSEurofirst index of top shares rose 0.5 percent to 1091 points.

The dollar gained against the euro and yen on Monday after Institute of Supply Management said its index of US factory activity for last month rose to the highest since May.

The euro fell 0.37 percent against the dollar at $1.3896. Against the Japanese yen, the dollar rose 0.24 percent at 80.58 from a previous session close of 80.390.

The US dollar index, which measures the greenback against major currencies, rose 0.15 percent to 77.386.

The dollar has come under pressure recently as markets geared up for the Federal Reserve's meeting on Tuesday and Wednesday, which is expected to end in a decision to stimulate the economy via quantitative easing.

How much QE the Fed will do is a major uncertainty for markets. A recent Reuters poll found most economists expect the Fed to buy $80 to $100 billion in assets per month.

Also adding to uncertainty are US elections on Tuesday. Polls show control of the US House of Representatives is expected to pass into Republican hands.

The Dow Jones Industrial Average was up 45.82 points, or 0.41 percent, at 11,164.31. The Standard & Poor's 500 Index was up 5.26 points, or 0.44 percent, at 1,188.52. The Nasdaq Composite Index was up 2.29 points, or 0.09 percent, at 2,509.70.

The data from China, the world's biggest consumer of metals with a voracious appetite for oil, helped lift energy and commodities prices, with more anticipated demand seen.

Japan's Nikkei lost 0.52 percent, hurt by a weaker dollar during its trading session, which makes the country's exports less competitive.

US Treasuries prices briefly turned negative on Monday after stronger-than-expected data on manufacturing and construction spending bolstered stocks and undermined the safe-haven appeal of government debt.

After briefly trading lower, benchmark 10-year notes slipped 6/32 in price to yield 2.63 percent, while the 30-year bond was 17/32 lower to yield 4.02 percent.