Germany's stock market climbs after vote surprise, euro drops

Germany's stock market rose Monday, as traders brushed off inroads made by the country's hard-right opposition party in national elections.

"While Germany looks set for lengthy coalition negotiations... we don't expect political uncertainty to materially dent business sentiment or economic growth" in Europe's biggest economy, said Stephen Brown, economist at Capital Economics research group.

"September's fall in German... business sentiment still leaves it pointing to very strong GDP growth," the expert said. 

Investors had much to digest following the weekend break, with a key survey showing a dip in German business confidence and Moody's decision Friday to cut Britain's long-term credit rating, citing economic uncertainty sparked by complex Brexit negotiations and the likelihood of weaker UK public finances.

"While the pound seems to have taken Moody's UK credit rating downgrade in its stride, the FTSE seems a bit sorer following the news," said Spreadex analyst, Connor Campbell. 

"However, there are a few things in play this Monday that makes it hard to gauge how much the downgrade is weighing on the UK index, with the German election results, and subsequent sterling gains, also contributing to the FTSE's latest trip below 7,300 points," he told AFP.

While a weaker euro gave a lift to share prices of German exporters Monday, the stronger pound had the opposite effect on British multi-nationals.

Elsewhere on markets, oil prices diverged as dealers assess the outlook for OPEC production cuts.

- Snap election -

Earlier, stocks on Japan's main index rallied on a weaker yen as traders bet correctly on Prime Minister Shinzo Abe calling a snap election -- but other Asian markets struggled following a weekend of tense exchanges between US President Donald Trump and North Korea's Kim Jong-Un. 

New Zealand's main stocks index meanwhile won 0.7 percent despite uncertainty following a weekend vote that left the country with a hung parliament.

Back in Europe, Germany's Chancellor Angela Merkel clinched a fourth term in the election, but her victory was clouded by the entry into parliament of the hard-right AfD in the best showing for a nationalist force since World War II.

It comes as it was revealed Monday that confidence among German businesses eroded slightly in September, with the Munich-based Ifo institute's closely-watched business confidence index falling to 115.2 points this month, a 0.7-point drop compared with August and short of predictions from analysts surveyed by Factset.

- Key figures around 0930 GMT - 

London - FTSE 100: DOWN 0.3 percent at 7,291.5 points 

Frankfurt - DAX 30: UP 0.3 percent at 12,627 

Paris - CAC 40: FLAT at 5,280.7 (close)

EURO STOXX 50: UP 0.1 percent at 3,545.5

Tokyo - Nikkei 225: UP 0.5 percent at 20,397.58 (close)

Hong Kong - Hang Seng: DOWN 1.4 percent at 27,500.34 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,341.55 (close)

New York - DOW: DOWN less than 0.1 percent at 22,349.59 (close)

Euro/dollar: DOWN at $1.1900 from $1.1947 at 2100 GMT on Friday

Dollar/yen: UP at 112.12 yen from 112.01 yen 

Pound/dollar: UP at $1.3533 from $1.3486 

Oil - Brent North Sea: UP 33 cents at $57.19 per barrel

Oil - West Texas Intermediate: DOWN seven cents at $50.59