French and German stocks rise after Hollande elected
Leading European stock markets closed higher on Monday despite the prospects for political and financial turmoil in Greece following general elections a day earlier.
London markets were closed, but in Paris the CAC 40 index jumped by 1.65 percent to 3,214.22 points in moderately thin trading, while in Frankfurt the DAX 30 also erased early losses to add 0.12 percent at 6,569.48 points.
In Madrid, the IBEX 35 index closed with a gain of 2.72 percent at 7,063.2 points.
Analysts said the election of Socialist Francois Hollande as the next French president had not had a major effect on investor sentiment.
The Paris market had opened lower following a poor showing in Greek elections of the two coalition parties that backed austerity measures, raising the question of how a second EU/IMF bailout for Greece would move forward.
That in turn could lead to a new round of uncertainty in the eurozone debt crisis.
The victory of French president-elect Francois Hollande did not come as a surprise for investors meanwhile, and was said by observers to weigh less on equity trading.
German Chancellor Angela Merkel, who had supported outgoing president Nicolas Sarkozy, said Monday that Hollande would be welcomed “with open arms” when he visits Berlin after taking office.
Cooperation between Germany and France, the two biggest eurozone economies, is crucial for the 17-nation bloc as it tries to resolve its dogged debt crisis.
Merkel said she and Hollande had agreed during a phone call on Sunday to work “well and intensively” together, adding: “Franco-German cooperation is essential for Europe and we all want Europe to succeed.”
Among French banking stocks, BNP Paribas had gained 1.95 percent to 29.56 euros and Societe Generale was 2.37 percent higher at 17.71 percent.
Credit Agricole, which has a stronger presence in Greece, was 2.61 percent lower however at 3.55 euros.
The interest rate on France’s benchmark 10-year bonds initially rose and the difference between interest rates on French and German debt, a critical measure of tension in the eurozone, widened slightly.
But the trend changed direction later with the French yield dipping to 2.79 percent at around 1230 GMT below Friday’s closing rate of 2.809 percent.
In France, Hollande had campaigned on a platform of boosting growth instead of the emphasis on spending cuts to overcome the country’s deficit.
Ratings agency Standard and Poor’s, which had stripped France of its top triple-A rating in January, said Hollande’s victory would have no immediate impact on its rating or outlook.
“We will analyse the policy choices of France’s president elect and the new government, taking into account the outcome of the parliamentary elections in June,” the agency said.
[A trades union banner outside the Paris stock exchange building in January calls for money to be spent on jobs and pay rather than the finance sector. AFP Photo/Miguel Medina]