The Stoxx 600 closed 1.1% higher at 642.34, with indices across Frankfurt, Milan, Madrid and Zurich all adding 1% or more

Stock markets across Europe surged on Monday on easing inflation concerns as oil prices retreated towards $100 a barrel, while bond yields pulled back sharply.

The Stoxx 600 closed 1.1% higher at 642.34, with indices across Frankfurt, Milan, Madrid and Zurich all adding 1% or more. London and Paris rose 0.8% and 0.9%, respectively.

Even Germany’s DAX pushed higher amid increased political uncertainty despite a disastrous showing for Chancellor Friedrich Merz’s CDU in two local elections where AfD made further gains.

A week ago markets were grappling with a possible slowdown in AI development, worrying about a cutoff in Saudi oil supplies and bracing themselves for a Fed rate hike, said Chris Beauchamp, chief market analyst at IG.

Talk of a slowdown has disappeared, Saudi oil supplies are holding up better than feared and the first Fed rate hike of a possible new cycle is behind us. Sentiment has shifted accordingly, and today looks like the start of a much more durable rally, he said.

Brent crude was down 3.5% to $100.29 a barrel by the close as Saudi Arabia increased exports through the Strait of Hormuz following disruptions to its East-West pipeline due to attacks by Houthi rebels last week.

Analysts at JP Morgan said total oil flows ​averaged 17.1m barrels per day (bpd) in the past 10 days, just 6.1m bpd below the 2025 average.

In equity news, shares in Novo Nordisk dropped sharply after the company’s set out new long-term goals in a turnaround planned to compete with rivals in the weight loss market.

Societe Generale gained after the French lender unveiled higher profitability targets and said shareholder distributions could exceed €21bn ($24.08bn) over the next four years.