(For a live blog on European stocks, type LIVE/ in an Eikon news window)
LONDON, Oct 1 (Reuters) - European shares rose cautiously early on Monday as optimism on the trade war front was lifted by a new U.S.-Mexico-Canada agreement, which is helping world markets enter the fourth quarter on a positive footing.
At 0720 GMT, the euro zone benchmark was up 0.2 percent with most European bourses and sectors trading in positive territory.
"News overnight of a late agreement between the U.S. and Canada to salvage the NAFTA trade agreement should give a boost to global risk appetite at the start of the fourth quarter," wrote Peel Hunt strategist Ian Williams, adding the deal "may offer encouragement that the other global trade disputes can settled satisfactorily."
Ryanair was the worst performer, down 7.5 percent after it cut its forecast for full-year profit and said there could be worse to come if recent coordinated strikes across Europe continue to hit traffic and bookings.
The low cost carrier's fall weighed on the wider sector which was one of the only ones in the red, down 0.6 percent.
Germany's Linde posted the highest rise after it received approval for its proposed $83 billion merger with Praxair PX.N from the Chinese antitrust authorities.
Italian banks were down 0.3 percent after Italian daily La Repubblica reported that the European Commission was set to reject Italy's budget plans in November and open a procedure against the country's public accounts. (Julien Ponthus and Danilo Masoni Editing by Raissa Kasolowsky)