(Reuters) – German shares hit ten-day highs on Monday after the federal election outcome reduced the chances of a left-wing coalition gaining power, while broader European markets cheered a surge in crude prices that powered oil stocks.

Germany’s blue-chip jumped 1%, leading gains among regional indexes, while the pan-European index added 0.6% in early deals.

Germany’s centre left Social Democrats, who narrowly won the 2005 national elections, said that they plan to seek a coalition with Greens and liberal Free Democrats. This is known as the “traffic lights” coalition.

Although it may take some time before the new government forms, investors felt relieved when the hard-left Linke party failed to reach the threshold of 5% required for entry into parliament.

Oil & gas stocks jumped 1.2% as futures headed for $80 per barrel amid supply concerns as parts of the world sees demand pick up with the easing of pandemic conditions. [O/R]