European shares scaled over three-week highs on Monday as new stimulus in China helped carry on last week's optimism, while investors looked for more economic data this week, including German inflation.

Authorities in China's commercial hub of Shanghai will cancel many conditions for businesses to resume work from Wednesday, easing a city-wide COVID-19 lockdown.

Shanghai officials have also announced an action plan to boost the economy, keeping up hopes of growth and demand from the world's second largest economy.

The pan-European STOXX 600 index rose 0.6% by 0724 GMT with broad-based gains led by technology stocks.

European stocks had marked their best week since mid-March last week as upbeat U.S. consumer sentiment data, signs of peaking inflation and clarity on the Federal Reserve's plan had calmed markets.

German annual inflation data, due at 1200 GMT, is expected to have risen to 8%, according to Refinitiv data, having hit a four-decade high of 7.8% last month.

This will precede similar data for the euro zone on Tuesday, which is seen notching another record high after rising to 7.4% in April, piling pressure on the European Central Bank.

Among individual stocks, Sanofi slid 2% after it announced an actual use trial of its Cialis erectile dysfunction treatment was put on clinical hold in the United States by the Food and Drug Administration.

Telecom Italia jumped 3.7% after the company and Italian state investor CDP signed a preliminary agreement to combine the phone group's fixed network assets with those of state-owned broadband rival Open Fiber.

(Reporting by Susan Mathew in Bengaluru; Editing by Shailesh Kuber)