European shares followed Wall Street higher on Monday on optimism about the third-quarter earnings season, while the dollar gained for the second session in a row.

Gold, currently running at record high prices, was up very slightly.

European shares climbed in early trade after Philips Electronics offered a better-than-forecast earnings report.

The pan-European FTSEurofirst 300 index of top shares was up 0.7 percent.

There is a bit more enthusiasm in the market, based on the view that corporate figures are going to be more positive, said Justin Urquhart Stewart, director at Seven Investment Management.

The gains followed Friday's 2009 closing high for the Dow Jones industrial average, which was based on growing optimism about the earnings season.

U.S. aluminum giant Alcoa got the U.S. third-quarter earnings season off to a good start last week but this week will bring banks into focus.

JPMorgan, Goldman Sachs, Citigroup and Bank of America all report over the nest five days.

Japan's stock market was closed on Monday for a holiday. Emerging market stocks as measured by MSCI were half a percent lower.

There is a high reverse correlation at the moment between emerging market stocks and the U.S. dollar, with the former rising when the latter is weak and vice versa.


The dollar was generally stronger against major currencies, including at a two-week high against Japan's yen.

The dollar had been under heavy selling pressure on the prospect that U.S. interest rates could remain low for a while and it hit its weakest level in eight months against the yen last week and a 14-month low against a basket of six currencies.

But after Australia's surprise rate hike last week, traders seized on remarks by U.S. Federal Reserve Chairman Ben Bernanke late Thursday that policy could be tightened as a recovery takes hold.

The dollar was up 0.7 percent from late Friday's levels to 90.40 yen, its strongest level since the start of the month and pushing up from the eight-month low of 88.01.

The euro slid 0.2 percent to $1.4691, having lost 0.5 percent on Friday.

Euro zone government bonds eased as the market braced for as much as 35 billion euros of debt supply this week in what could be the biggest weekly raft of issuance for 2009.

Countries from Germany to Spain are scheduled to issue government securities this week, with the Netherlands kicking off the supply flow on Tuesday.

(Additional reporting by Joanne Frearson)

(Editing by Toby Chopra)