FRANKFURT: Germany's blue-chip DAX and other European stock indexes opened higher Monday after Finance Minister Olaf Scholz's Social Democrats won a tight election over the conservatives of outgoing Chancellor Angela Merkel.

The German index rose 0.85 percent to 15,665 points shortly after the open of markets in response to a national result expected to bring continuity in economic policy.

Businesses breathed "a big sigh of relief" that the far-left Die Linke party is unlikely to enter government after a poor performance at the polls, said Holger Schmieding, chief economist at Berenberg Bank.

"The tail risk of significant tax hikes, a denser web of regulations, reform reversals and a tight lid on housing rents has evaporated," said Schmieding.

Avoiding this "worst-case scenario" for business was a "good sign for stability", said president of the Family Companies Association Reinhold von Eben-Worlee.

The next German government needs more "courage and change", said Marcel Fratzscher, president of the German Economic Institute (DIW).

"Germany is faced with its toughest challenges in a long time," Fratzscher said, "the next government must quickly make decisions on the future direction of climate protection, digital transformation and social renewal."

In Paris, the CAC 40 rose 0.7 percent at 6,683.85 points, while the FTSE 100 in London climbed 0.9 percent to 7,114.75.