Euro surge as ex-economy minister Macron leads French election

The euro hit five-month highs and bank stocks have surged in reaction to Emmanuel Macron's victory in the first round of the French presidential election.

The single European currency - supported by the centre-left former economy minister and investment banker - gained 2% to $1.09 when trading began in Asia before later settling around 1.3% higher.

The euro was also 1.3% - or over 1p up - against the pound at €0.8480, while many stock markets which had been nervous of a potential Trump or Brexit-style shock in Paris, added value.

The CAC 40 in France opened 4% up and later extended those gains while the DAX in Frankfurt hit record highs.

The FTSE 100 was 1.9% up in early afternoon trading. Banking stocks were leading the way across Europe, with shares in French lenders Societe Generale (Swiss: 519928.SW - news) and BNP Paribas (LSE: 0HB5.L - news) up almost 10%.

It reflected an erosion of concern for a possible capital flight in the event of an election win for Mr Macron's main opponent, Front Nationale leader Marine Le Pen (Other OTC: PENC - news) , who wants the country out of the euro.

Forecasts suggest 39-year old Mr Macron has a comfortable lead in the polls ahead of the final round of voting.

The results of the first round were largely in line with polling - a factor which helped calm market jitters on Monday as analysts had warned that any sniff of a win for Ms Le Pen could have seen the euro reach parity with the dollar.

:: Macron odds on to be next President

Ray Attrill, head of FX strategy at National Australia Bank, said: "Markets are happy to buy what they see as the fact -- that 39-year-old Emmanuel Macron will be confirmed as the next president of the French Republic in two weeks' time."

Other market participants were more wary, suggesting that some element of caution would remain priced-in because Ms Le Pen was still in the race and neither politician had held high elected office.

Senior (Other OTC: SNIRF - news) market analyst at ETX Capital, Neil Wilson, said: "While markets may overall take this result as net positive, we have in the final round two candidates with no experience and no real say over the deputies.

"Governing France could become even harder than usual and that will mean any initial relief will need to be tempered by a tough reality.

"A couple of years into a Macron presidency will be a better time to discuss the real impact of this result. For now the market - vis-a-vis the euro - disaster has been averted."