- In Germany, preliminary results on Monday morning showed the center-left Social Democratic Party gaining the largest share of the vote with 25.7%.
- Angela Merkel's right-leaning bloc of the Christian Democratic Union and Christian Social Union was seen with 24.1% of the vote.
LONDON — European stocks closed mixed on Monday, with German election results seen eliminating a key market risk for investors in the region.
The pan-European Stoxx 600 provisionally closed marginally lower, having given up gains of up to 0.7% earlier in the session. Oil and gas stocks jumped 2.8% while tech shares fell 1.4%.
In Germany, preliminary results on Monday morning showed the center-left Social Democratic Party gaining the largest share of the vote with 25.7%. Angela Merkel's right-leaning bloc of the Christian Democratic Union and Christian Social Union was seen with 24.1% of the vote.
But coalition negotiations, which could begin on Monday, are likely to take weeks or even months.
Market watchers noted that the poor showing for Germany's far-left Die Linke party, meant that a fully left-leaning coalition in the Bundestag was now out of the question.
Holger Schmieding, chief economist at Berenberg Bank, said in a research note that a pact between the SPD, Die Linke and the Greens could have "impaired trend growth through tax hikes, reform reversals and excessive regulations."
Elsewhere, European Central Bank President Christine Lagarde said in remarks to a European Parliament committee that euro zone inflation could exceed the bank's projections but price increases would likely be temporary.
Meanwhile, the U.K.'s opposition Labour party resumes its annual conference in Brighton Monday.
Global markets are coming off a volatile week, with choppy trade looking set to continue. U.S. stocks were mixed Monday as investors look to Washington, where lawmakers are attempting to prevent a government shutdown, a default on U.S. debt and the possible collapse of President Joe Biden's sweeping economic agenda.
In Asia, markets in Shanghai sank on Monday as analysts monitored a recent power crunch in China which has trimmed factory production.
U.K. energy stocks like BP were closely watched on Monday after panic buying over the weekend due to a truck driver shortage that left many gas stations in Britain without any fuel. BP shares gained 3.5%.
Rolls-Royce shares surged 11.3% after a new contract win and reports that the company has agreed to a £1.5 billion ($1.06 billion) sale of its ITP Aero division.
"Having already seen a pick-up in its share price in recent weeks thanks to more restrictions being lifted on air travel which should benefit its plane engine maintenance operations, [Rolls-Royce] shares have now hit an 18-month high after a new contract win," said Russ Mould, investment director at British online stockbroker AJ Bell.
The company has struck a deal with the U.S. Air Force which means its F-130 engine will power the B-52 for the next 30 years.
At the bottom of the European blue chip index, Swedish IVF company Vitrolife fell 9.9%.
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- CNBC's Ryan Browne contributed to this report.