The euro and German stocks rallied on Monday as investors welcomed Germany’s election result that put centrist parties on track to form a coalition, although optimism was tempered by potentially tricky negotiations over economic policy.

Provisional results confirm that mainstream conservatives led by Friedrich Merz won Germany's national election, while a far-right party surged to become the nation’s second-largest.

Germany's conservatives won the national election on Sunday, while the far-right Alternative for Germany came in second, its best ever result.