European stock markets rise on Wall Street, stronger dollar

Logo of the London Stock Exchange. (AFP Photo/Ben Stansall)

And the weaker pound and euro also helped European stock markets bounce back - at least for now - from jitters about upcoming elections, analysts said.

"A strong open on Wall Street saw the Dow Jones hit a fresh record high," said Jasper Lawler of London Capital Group. "So far any moments of doubt over the policies (of US President Donald Trump) have been a buy-the-dip opportunity."

Both the FTSE-100 index in London and Frankfurt's blue-chip DAX 30 closed higher.

Stock prices in London have benefited in recent months from a sharp drop in sterling following Britain's vote for Brexit. This is because the FTSE-100 index is loaded with multinationals earning in currencies other than the pound.

But in France, the CAC 40 index slipped in face of uncertainty about the outcome of its upcoming presidential election.

INCREASING POLITICAL RISKS

"The increasing popularity of (far-right leader) Marine Le Pen ahead of the French elections, coupled with growing disapproval towards the mainstream parties and general anti-establishment feeling in the US and Europe over the last 12 months could seriously add to the political instability in Europe," said Oanda analyst Craig Erlam.

"This is adding to the feeling of uncertainty and may continue to do so as the elections approach," he added.

Le Pen on Sunday vowed that she would be a president who puts France first as she formally launched a campaign echoing many of the themes that propelled Trump to the White House.

Germany will also hold a general election this year where a surge in support for populist parties might also be observed.

"Traders are maintaining some caution given the increasing political risk environment in both the US and Europe," said Oanda's Erlam.

European Central Bank boss Mario Draghi on Monday said that "risks to the euro area outlook remain tilted to the downside and relate predominantly to global factors", and he stood ready to further ease monetary policy if necessary.