European stocks began the new trading week with cautious gains, as upcoming U.S. and U.K. inflation data are set to take center stage in market focus over the next few days.

At 1:55 p.m. in London, the pan-European Stoxx 600 index had risen by 0.1%, as investors sought signs that the recent market downturn might be over. Leading the gains were oil and gas stocks, which increased by 0.8%, despite the Organization of Petroleum Exporting Countries (OPEC) reducing its 2024 global oil demand growth forecast.

European markets followed the positive trend set by their Asia-Pacific counterparts, continuing to recover from recent volatility. Global stocks experienced significant fluctuations last week, with sharp declines followed by a notable rebound.

For the week, the Stoxx 600 index recorded a 0.27% gain, based on LSEG data, recovering from a 2.9% decline the previous week.

On Monday, U.S. stock futures edged higher in anticipation of crucial inflation data, with the core producer price index to be released on Tuesday, followed by July's consumer price index on Wednesday.

Investors are looking for a clearer picture of the U.S. economy's health after recent concerns about a potential job market slowdown unsettled traders and affected the market.

"There were some nerves at the start of last week and into the weekend, but overall, you see a kind of market reset when looking at where we've settled. A lot of the stretched positions have been cleared, allowing the market to better price fundamentals," Richard Kelly, head of global strategy at TD Securities, said on CNBC's "Squawk Box Europe" on Monday.

Kelly also noted that August tends to be a challenging period due to low liquidity, making it difficult for the market to price in shocks, but he believes the recent turbulence has served to clear out some issues.

Markets are expected to remain "jittery" until further U.S. economic data, such as payrolls and manufacturing reports, are released next month, Kelly added.

Wednesday will also see the release of U.K. inflation data, the first since the Bank of England reduced interest rates by 25 basis points. After maintaining at 2% for two months, economists polled by Reuters anticipate a rise in the headline rate to 2.3%.