Stocks in Frankfurt surged on 25 February after the conservatives, led by Friedrich Merz, won Germany's national elections. Investors are hopeful that Europe's largest economy can emerge from recession, AFP reports.

Elsewhere, stocks mostly fell, with investors still worried about the inflationary effect of US President Donald Trump's plans to impose tariffs on various trading partners and their impact on interest rates and economic growth.

Major U.S. indexes ended mostly lower after Trump signaled plans to continue tariffs on Canada and Mexico once their 30-day suspension expires.

"Markets like certainty," said Adam Sarhan of 50 Park Investments. "There's a lot of uncertainty right now."

Earlier, however, Frankfurt's DAX index jumped 0.8 percent in early trading but gave up some of its gains as the day progressed and closed 0.6 percent higher.

Mertz called for a new coalition government to be formed quickly, warning that Trump is driving rapid and disruptive change and that "the world is not waiting for us."

"The hope that a Conservative victory could help pull Germany out of its economic stupor and help shore up collective defences has lifted investor spirits," said Susanna Streeter, head of money and markets at Hargreaves Lansdown. 

European defence stocks rose, with Germany's Rheinmetall up more than 6% and Britain's BAE Systems up almost 4%.

With more than 28% of the vote, Merz's CDU/CSU bloc easily defeated Chancellor Olaf Scholz's Social Democrats (SPD) and the Greens, with the far-right Alternative for Germany (AfD) scoring a record over 20%.

Merz said he would lend a hand to the Social Democrats in the hope of creating a stable governing alliance of the two traditional parties.

But CMC Markets analyst Konstantin Oldenburger said the DAX's failure to hold on to its gains "can probably be attributed to the perception that crucial negotiations between the (conservatives) and the Social Democrats have yet to take place".

The euro rose against the dollar and the pound.

Elsewhere on 24 February, shares in Amsterdam-listed Just Eat Takeaway soared almost 54% after it received a €4.1bn takeover offer from investment giant Prosus.

Asian equity markets were mostly lower after last week's dismal finish for Wall Street, fueled by disappointing economic data, with a February 21 report showing that activity in the key U.S. services sector hit a 25-month low in February and that consumer sentiment was down nearly 10% from January. | BGNES