European stocks edge higher while Euro weakens

Politics dominated trading on Monday, with the euro sliding as Germany’s election result foreshadowed potentially complex political-coalition building. Gold fell as West Texas crude retreated.

The common currency weakened against almost all its major peers after Chancellor Angela Merkel won Germany’s election with a smaller share of the vote, while the country’s main far-right party, Alternative for Germany, posted a surprisingly strong result. The yen declined ahead of a fresh stimulus package being unveiled by Japan’s prime minister before possible early elections. Stocks in Europe defied a negative Asia session to edge higher, helped by the weaker euro, but shares in developing nations slumped.

The process of building a new government could take weeks, so markets may well move on from the result quickly. Trouble continues to foment in the Catalonia region of Spain, while central banks grandees including Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are among those scheduled to speak this week.

Meanwhile, the New Zealand dollar lost as much as 1.1 percent amid disappointment the ruling party failed to get a majority in a weekend vote, kicking off what could be weeks of coalition-building talks.

The Stoxx Europe 600 Index gained 0.1 percent as of 9:36 a.m. London time, to the highest in more than two months. The MSCI All-Country World Index dipped 0.2 percent to the lowest in more than a week. The U.K.’s FTSE 100 Index fell 0.3 percent, the largest fall in more than a week. Germany’s DAX Index rose 0.1 percent to the highest in more than 10 weeks. The MSCI Emerging Market Index decreased 0.8 percent to the lowest in more than two weeks. Futures on the S&P 500 Index dipped 0.2 percent on the biggest decrease in almost three weeks.

Japan’s Topix index advanced 0.5 percent at the close in Tokyo. The Japanese yen declined 0.1 percent to 112.15 per dollar.

Gold declined 0.4 percent to $1,292.78 an ounce. West Texas Intermediate crude fell 0.4 percent to $50.46 a barrel.