A display shows the German Stock Market Index DAX
Most European stock markets closed higher on Monday despite the prospects for political and financial turmoil in Greece following general elections there a day earlier.
London markets were closed, but in Paris the CAC 40 index erased early losses and jumped by 1.65 percent to 3,214.22 points in fairly thin trading, while in Frankfurt the DAX 30 ended up adding 0.12 percent to 6,569.48 points.
Analysts said the election of Socialist Francois Hollande as the next French president did not have a major effect on investor sentiment.
In Madrid, the IBEX 35 index surged by 2.72 percent to close at 7,063.2 points after the government said it would clean up huge bad loans at the nation's fourth-biggest listed bank, Bankia.
The European Commission had hinted meanwhile that it could give Spain more leeway to meet budgetary deficit objectives given a deteriorating economy and troubled banking system.
Deutsche Bank analyst Alain Gaudry said that "concern about Europe is still there, but is focused on Greece and not the arrival of Socialists to power" in France, which had been anticipated for some time.
In Athens, Greek stocks plunged 6.67 percent after mainstream parties fell short of a governing majority, putting hard-won agreements to save the country's economy and eurozone membership back into question.
But Dow Jones Newswires quoted traders as saying that better-than-expected German manufacturing orders had helped turn sentiment around elsewhere after many European stock markets started the day in negative territory.
On public debt markets, the difference between interest rates on 10-year French and German debt, a key measure of tension in the eurozone, narrowed slightly in late trading.
Despite the anti-austerity votes in France and Greece, German Chancellor Angela Merkel mounted a staunch defence of belt-tightening in the face of the eurozone crisis and said she had no plans to change course.
US stocks traded modestly lower in midday exchanges, with the Dow Jones Industrial Average down 0.37 percent, the S&P 500 losing 0.18 percent and the tech-heavy Nasdaq off 0.12 percent.
In Asia, stocks slumped with Tokyo diving 2.78 percent and Hong Kong down 2.61 percent, hit by the European votes as well as weak jobs data from the United States at the end of last week.
The euro fell to $1.2954, the lowest level since late January, then rallied to $1.3046 around 1600 GMT, which was still below $1.3082 in New York late on Friday.
As sovereign bond trading opened, the interest rate on France's benchmark 10-year bonds rose and the difference between interest rates on French and German debt, widened slightly.
But the trend changed direction later with the French yield dipping to 2.795 percent at around 1630 GMT, below Friday's closing level of 2.809 percent.
France raised nearly eight billion euros on Monday in short-term debt, with rates falling on two maturities.
Merkel said she had no plans to change course and stressed that "at its core, the discussion is about not whether we need budget consolidation or growth -- it is absolutely clear we need both."
The German government nonetheless ruled out reworking the European Union's fiscal pact to include growth measures suggested by Hollande.
The international 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.
In Brussels, the European Commission said it "hopes and expects" that any future Greek government would respect engagements the country has already made in return for two rounds of international rescues.
Kintai Cheung, analyst at Credit Agricole, said the electoral outcomes in France and Greece meant that "a wave of renegotiations for bail-out programmes may be sparked."