The euro and German stocks rallied on Monday as investors welcomed Germany’s election result that put centrist parties on track to form a coalition, although optimism was tempered by potentially tricky negotiations over economic policy.

Europe must seek to “achieve independence” from the United States, Germany’s likely next chancellor Friedrich Merz said after his opposition conservatives won elections on Sunday, in a vote that also saw surging support for the far-right.

Provisional results confirm that mainstream conservatives led by Friedrich Merz won Germany's national election, while a far-right party surged to become the nation’s second-largest.