The euro rose and Paris equities surged at the start of trading Monday, July 1, on signs that the French far right may not win an absolute parliamentary majority and take control of the government.
The single currency had come under pressure in recent weeks on worries Marine Le Pen's Rassemblement National (RN) would storm to victory and push through big-spending policies that could put the country on a collision course with the European Union.
The euro climbed to as high as $1.0777 Monday, with some predicting it could rise further as other parties embark on horse-trading to limit the RN's gains. The Paris CAC 40 index jumped 2.6% to 7,672.71 points, as a week of intense campaigning began ahead of runoff elections on Sunday.
The far-right RN won a resounding victory in the first round of the polls Sunday, with President Emmanuel Macron's centrists trailing in third behind a left-wing coalition.
Yet the key point of suspense ahead of the second round on July 7 was whether the RN would win an absolute majority in the new Assemblée Nationale. President Emmanuel Macron called for a "broad" alliance against the far-right in the second round, which will see run-off votes where there was no outright winner in the first round.
Elsewhere in European stocks trading, Frankfurt's DAX index won 1.1% to 18,438.96 points at the open Monday.
London's FTSE 100 won 0.6% to 8,210.42 as Britain gears up for its own general election on Thursday, with the main opposition Labour party on course to end 14 years of Conservative rule. The Tories, led by Prime Minister Rishi Sunak, have trailed badly in polls throughout the UK election campaign.