German shares hit ten-day highs on Monday (September 27), after Sunday's election outcome reduced chances of a left-wing coalition forming a government.
Germany's blue-chip DAX jumped as much as 0.9% in early trade, before easing back.
It lead gains among regional indexes.
The country's center-left Social Democrats hoped to join forces with the Greens and the liberal Free Democrats, after they narrowly won their first national election since 2005.
Forming the new government could take time, but investors were relieved that the hard-left Linke party fell below the 5% threshold needed to enter parliament.
Here's Robert Halver, head of capital analysis at Baader Bank.
"The German stock exchange is relaxed: a leftist government was avoided. It would have meant too much uncertainty. It doesn't matter now whether we will get a Jamaica or traffic light coalition government, we can live with either. What's important however is that we get a government quickly."
Broader European markets were also enjoying a surge in crude prices that powered oil stocks.
The oil and gas index climbed 1.8% to hit a three-month high, as Brent futures headed for $80 per barrel amid supply concerns.
Oil majors jumped, with BP up around 3%.
While worries about hawkish central bank policies, fallout from China Evergrande's financial troubles and inflation have caused concern, investors are hoping that progress on tackling the global health crisis will drive a steady global recovery.
Those hopes have lifted the regional STOXX 600 index more than 16% so far this year.