Wall Street advanced on Monday, the first trading day of the second quarter, as upbeat Chinese and manufacturing data overshadowed a report showing continued softness in Europe.

Stocks closed their strongest quarter in more than two years on a positive note on Friday, led by recently underperforming sectors like energy and health care.

U.S. Institute for Supply Management's index of national factory activity rose to 53.4, topping forecasts. A reading above 50 indicates expansion. China's Purchasing Managers' Index rose to an 11-month high.

Obviously this survey of manufacturing executives suggests factory activity is growing more quickly, said Mark Martiak,, senior wealth strategist at Premier/First Allied Securities in New York.

The good news is U.S. stocks posted their best quarterly gain since 1998. We are seeing some gradual upticks, so the trend is your friend.

But a report in Europe showed the region's manufacturing sector shrank for an eighth straight month in March, highlighting the difficulties in getting the euro zone economy on track.

The Dow Jones industrial average <.DJI> gained 60.32 points, or 0.46 percent, to 13,272.36. The Standard & Poor's 500 Index <.SPX> rose 10.63 points, or 0.75 percent, to 1,419.10. The Nasdaq Composite Index <.IXIC> put on 23.04 points, or 0.75 percent, to 3,114.61.

Equity markets will be closed for the Good Friday holiday, which could create lighter volume and increase volatility. Despite the holiday, the government will release the March payrolls report on Friday, which could leave investors hesitant to make big bets ahead of the data.

In a short week, investors want to sit tight and see what is in front of them. We are going to probably be in a very narrow trading range over these four days, said Martiak.

The manufacturing data helped boost energy and basic materials stocks as crude oil and commodity prices climbed. National Oilwell Varco Inc gained 2 percent to $81.01 while Freeport McMoRan Copper & Gold Inc rose 2.8 percent to $39.11. The PHLX oil service sector index <.OSX> was up 1.5 percent.

Beauty company Coty Inc offered to buy cosmetics direct seller Avon Products Inc for $23.25 a share, a 20 percent premium over Friday's closing price. Avon jumped 14.6 percent to $22.18 at midday.

Despite falling six of the last nine sessions, the S&P 500 gained 12 percent in the first quarter, its best start of the year since 1998 and the best overall quarter since the third period of 2009. The broad index sits just off 4-year highs.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)