Markets have soared after Emmanuel Macron won the first round of France's presidential race, with investors betting the centrist would prevail against far right candidate Marine Le Pen in the second round of voting.
Macron won 23.8% of votes in Sunday's poll, ahead of 21.5% for Le Pen, making the centrist candidate the favourite to claim victory in the second round of voting to be held on 7 May.
The news sent European markets soaring. France's CAC 40 surged 4.2%, Italy's FTSE MIB was up 4.5%, Spain's Ibex rose 3.6% and the German DAX 30 was up 3.2%.
The FTSE 100 meanwhile rose 150 points, or 2.1%, to 7,262, with banks jumping to the top of the index as risky assets soared.
On the bond markets, French government bonds rallied hard, with the 10-year yield, which moves in the opposite direction to prices, tumbling from 0.86% to 0.76%.
The appetite for risk meanwhile hit safe haven German bunds, with the 10-year yield jumping from 0.25% to 0.35%, while gilts slid, with the 10-year yield rising from just over 1% to 1.1%.
The euro soared, rising 1.1% against the pound to 84.7p.
'Markets will be buoyed by the positive outcome of the French election last night, with the centrust Emmanuel Macron going on to face the far right Marine Le Pen,' said Anna Stupnystska, global economist at Fidelity International.
'This is not just because Macron is likely to win. Concerns over polling reliability and turnout rate have been allayed after Sunday's strong figures.'
Trevor Greetham, head of multi asset at Royal London, said the presence of Macron on the second round ballot was a big relief for investors.
'The main worry for investors and traders watching the French election was that voters would be presented with a choice between anti-EU candidates on the left and the right in the second round,' he said.
Azad Zangana, senior European economist at Schroders, said the result was luring investors back into European stock markets.
'The centrist pro-European Macron will not only help stabilise the European Union, but also help build stronger support mechanisms,' he said.
'The contest is not yet over, but investors are likely to take comfort and to begin to think about the more attractive valuations that European equities offer - a market that has struggled to keep up with the global reflation trade due to political uncertainty.'
On the FTSE 100, banks were among the biggest risers as investors embraced risk following the French election results.
Barclays (BARC) was up 5.8% at 219.9p, Standard Chartered (STAN) rose 5.2% to 722p and Royal Bank of Scotland (RBS) rose 3.8% to 249p.
Ireland's Smurfit Kappa (SKG.I), a paper and packaging group that operates in Europe, was the FTSE 100's biggest riser, up 6.3% to £21.09.
The rally was broad-based, with only a handful of stocks in the red. Energy providers fell after the Conservative party vowed to cap domestic prices, with Centrica (CNA) down 3.4% at 200.6p and SSE (SSE) falling 2.6% to £14.06.
Precious metal miner Randgold Resources (RRS) fell 1.7% to £69.50 as the bullish sentiment hit gold and silver prices.
The big move in European markets meanwhile sent the shares prices of investment trusts focused on the region surging up the FTSE 250 and Small cap indices.
Fidelity European Values (FEV ) was among the biggest FTSE 250 risers, up 4% at 202.8p, while on the FTSE Small Cap index, European trusts dominated the leaderboard. Risers included:
- JPMorgan European Income (JETI ) +3.9% to 154.3p;
- Montanaro European Smaller Companies (MTE ) +4.2% at 734.5p;
- Jupiter European Opportunities (JEO ) +3.9% at 645p;
- BlackRock Greater Europe (BRGE ) +3.4% at 298.3p;
- TR European Growth (TRG ) +2.8% at 934.5p;
- European (EUT ) +2.7% at 853p;
- Henderson European Focus (HEFT ) +4.2% at £12.71.