Strong gains by bank shares helped push US stocks to fresh records Monday, while Madrid sank on resurgent worries over the Catalan independence crisis.
Comments from Federal Reserve Chair Janet Yellen over the weekend predicting inflation would soon rise were seen as further boosting the odds the Fed will lift interest rates in December.
Shares (Berlin: DI6.BE - news) of major banks, including JPMorgan Chase (Swiss: JPM-USD.SW - news) and Bank of America (Swiss: BAC-USD.SW - news) , gained around two percent and were among the bigger winners as the Dow, S&P 500 and Nasdaq (Frankfurt: 813516 - news) all closed at records.
Yellen's remarks also boosted the dollar against the euro and other currencies.
The Dow finished up 0.4 percent at 22,956.96, within striking distance of 23,000 for the first time.
Wall Street has notched numerous records over the last month on expectations of solid third-quarter corporate earnings and hopes that President Donald Trump will win passage of a tax cut plan.
Frankfurt and Paris each closed higher, with Frankfurt breaking the 13,000 level again, while London edged down.
In Madrid, the stock market shed 0.8 percent after the Spanish government warned Catalonia's separatist leader that he has only three days left to "return to legality" after he refused to say whether he would follow through on a threat to declare independence from Spain.
The euro could fall further "in the unlikely event Catalonia is allowed to go independent, as this outcome is probably not priced in the markets," said Fawad Razaqzada of Forex.com.
"Otherwise, the single currency generally looks strong, owing to improvement in economic conditions across the Eurozone, including Spain."
Uncertainty also was a factor in the oil market, in which crude prices rose after Iraqi forces swept across disputed Kirkuk province following soaring tensions over an independence referendum, seizing the governor's office, key military sites and an oil field.
In other commodities news, palladium prices soared to the highest level in 16 years, boosted by increased demand for its use in catalytic converters in petrol engines as consumers shift away from diesel vehicles.
At about 1030 GMT, the price of palladium hit $1,005.20 per ounce, the highest level since February 2001.
- Key figures around 2100 GMT -
New York - DOW: UP 0.3 percent at 22,956.96 (close)
New York - S&P 500: UP 0.2 percent at 2,557.64 (close)
New York - Nasdaq: UP 0.3 percent at 6,624.00 (close)
London - FTSE 100: DOWN 0.1 percent at 7,526.97 points (close)
Frankfurt - DAX 30: UP 0.1 percent at 13,003.70 (close)
Paris - CAC 40: UP 0.2 percent at 5,362.88 (close)
Madrid - IBEX 35: DOWN 0.8 percent at 10,181.4 (close)
EURO STOXX 50: UP 0.05 at 3,606.44
Tokyo - Nikkei 225: UP 0.5 percent at 21,255.56 (close)
Hong Kong - Hang Seng: UP 0.8 percent at 28,692.80 (close)
Shanghai - Composite: DOWN 0.4 percent at 3,378.47 (close)
Euro/dollar: DOWN at $1.1796 from $1.1822 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.3252 from $1.3291
Dollar/yen: DOWN at 112.21 from 111.86 yen
Oil - Brent North Sea: UP 65 cents at $57.82 per barrel
Oil - West Texas Intermediate: UP 42 cents at $51.87 per barrel