For the past couple of months, the Dow Jones Industrials (DJINDICES:^DJI) have been rising to record highs. But after having dominated the headlines throughout much of last year, Europe has moved to back of most investors' minds. Let's take a closer look at what's been happening in Europe lately and whether you should be confident that the all-clear has sounded.

A look at Europe's big players
Despite the temptation to think of Europe as a single entity, there's a huge disparity among the various national economies and stock markets in Europe. In Germany, where austerity has been a centerpiece of the response to tough economic conditions, the DAX (DAXINDICES:^DAX) set a new all-time record high of its own on May 3 and has continued to soar, rising another 5% in just the past few weeks. As Fool contributor Dan Carroll noted last week, European automakers have benefited from a rise in car sales, representing the first gain for the industry in about a year and a half. That's consistent with what we saw from General Motors (NYSE:GM) earlier this month, which posted losses in Europe of $175 million that were much lower than what anyone had expected.

By contrast, France's stock market continues to languish well below its past records set in 2007, and even though the CAC 40 broke through the 4,000 level last Friday for the first time since mid-2011, French leaders aren't nearly as committed to the austerity path. With its success in getting European Union officials to give the nation more time to reduce its deficits, France is responding to public pressure to avoid big budget cuts that many of its people believe are worsening the recession.

Finally, outside the eurozone entirely, Great Britain has come within spitting distance of its own all-time stock market high, with the FTSE 100 (FTSEINDICES:^FTSE) closing today at levels about 1% below the record mark of 6,930 set on the last trading day of 1999. The banking sector has done particularly well lately, with Royal Bank of Scotland (NYSE:RBS) having produced extremely strong gains in what is shaping up to become a full recovery from the depths of the financial crisis. Insulated from the eurozone's troubles to some extent because of its decision to retain its own currency, Great Britain is dealing with its own austerity issues, but with the Canadian central bank leader slated to take over as head of the Bank of England, policy changes may be in the offing for the island nation later this year.

Keep your eyes open
As easy as it is to focus solely on U.S. markets, it's essential to stay aware of events around the world. In a global economy, what's happening in Europe can have a dramatic effect on American companies and investors.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.