European stocks rally after first round of French vote

(Reuters) – European stocks rallied on Monday, with French shares leading the way after the far-right National Rally (RN) party scored historic gains in the first round of parliamentary election, but by a smaller margin than what some polls had suggested.

France’s blue-chip jumped 2.6% to lead gains among regional markets, with the country’s main lenders including BNP Paribas (OTC:), Societe Generale (OTC:) and Credit Agricole (OTC:) advancing between 4.8% and 7.9%.

That helped the region-wide index scale 1% by 0709 GMT, after four consecutive sessions of losses.

The RN and allies had 33% of the vote, followed by a leftwing bloc with 28% and President Emmanuel Macron’s centrists with just 20%, but the final result will depend on days of horsetrading before the July 7 run-off.

The market reaction was mostly a case of ‘buy the rumour sell the fact’ and chatter that National Rally may not secure an absolute majority in the second round, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The CAC 40 closed at its weakest level in more than five months on Friday on concerns about France’s fiscal discipline under the new government.

Among single stocks, Atos climbed 11.7% as the French technology company reached an agreement with a group of banks and bondholders on terms for its debt restructuring.

Nestle rose 1.1% after its CEO said in an interview to a local weekend paper that the Swiss food giant is targeting stable growth in sales volumes from the second quarter throughout the remainder of the year as cost inflation eases.