Most European stock markets rebounded Monday after initially tumbling in the wake of weekend election results in France and Greece, boosted by gains for resources and construction companies, though political fallout continued to weigh on Greek stocks.
The Stoxx Europe 600 index XX:SXXP +0.72% rose 0.7% to close at 254.83, a marked reversal after losses of more than 0.5% earlier. The benchmark had its worst performance since late March last week, down 2.4%.
Flat to modestly lower, U.S. stocks also performed better than might have been expected. London's stock market was closed for a holiday on Monday.
Europe's week: Elections, Glencore
Investors respond to French and Greek elections, the Bank of England makes its rate decision, and Glencore and Sainsbury are the pick of a bumper earnings week.
French stocks rebound
In France, Socialist challenger Hollande ousted President Nicolas Sarkozy in Sunday's final election round. Read more on Hollande ousting Sarkozy in French vote
French stocks initially lurched lower but eventually regained their footing as buyers stepped in. The French CAC 40 index FR:PX1 +1.65% ended 1.7% higher at 3,214.22.
While a Hollande victory had been expected, the inconclusive result of Greece's parliamentary vote stirred an initial panic among European investors, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York.
As the day wore on, investors responded "rationally" to the Hollande win, he said.
Investors see Hollande as "unlikely to attempt to reverse the fiscal compact and more likely to help [German Chancellor Angela] Merkel think through the future of Europe," Wilkinson said. "What started out as a growing fear of a greater schism within Europe has morphed into a rational expectation that Hollande likely knows his limitations."
BNP Paribas SA FR:BNP +4.21% rose 4.2% in Paris, while Société Générale SA FR:GLE +4.02% advanced 4%. Also higher, building companies Lafarge SA FR:LG +4.03% rose 4% and Vinci SA FR:DG +3.01% gained 3%, while steelmaker ArcelorMittal SA FR:MT +1.92% adding 2.5%.
SXXP 254.83, +1.83, +0.72%
PX1 3,214.22, +52.25, +1.65%
DAX 6,569.48, +8.01, +0.12%
Stephen Pope, managing partner at Spotlight Ideas, said the gains for basic resources and construction companies helped drive Europe's rebound.
If the new French president "gets his way and we enter a golden era of infrastructure spending someone in the private sector will have to provide the material and technical skills to deliver the projects on time and in good order, " he noted.
While many country-specific indexes shook off losses by the afternoon, Greek stocks remained deep in negative territory. The ASE Composite index GR:GD -6.67% sank 6.7% to 643.87, with National Bank of Greece SA GR:ETE -8.28% NBG -5.63% tumbling more than 8%.