European stocks closed higher again Monday but gains were limited as the continued turmoil in government bond markets blunted momentum in the global "Trump Rally."

Investors are continuing to bet that President-elect Donald Trump will unleash the biggest peacetime stimulus since the Second World War soon after he assumes office in January, with the resultant inflationary aftermath of his $9.5 trillion tax overhaul hitting bond markets all over the world.

The volatility seen Monday in Italy's government bond market -- which, with more than €2.2 trillion in outstanding, is the third-largest in the world - is a case-in-point. Benchmark 10-year bond yields raced past a 52-week high to trade at 2.2%, taking the extra yield, or spread, that investors demand to hold Italian government debt instead of triple-A rated German bunds to 1.82% - a two-year high and a 20 basis point increase from Friday.

Yields on Italy's debt maturing in 30 years, the most sensitive to interest rate movements, rose 20 basis points in Monday trading to 3.34%, the highest since July 2015.

In fact, Italy's bank-heavy FTSE-MIB index was the only major European bourse to end the day in negative territory, falling 0.3% to 16,705.6 points. 

Elsewhere, 10-year German government bond yields touched a nine-month high of 0.38% Monday, extending a two-week stretch of declines that has effectively doubled the benchmark European borrowing rate, before paring losses to 0.33%. U.K. government bonds, known as Gilts, also touched multi-month highs, with 10-year yields trading at a six-month high of 1.49%.

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