The euro rose to two-week highs against the dollar. Similar gains were seen against the zloty. Market analysts are predicting a hung parliament as the most likely result of the second round of voting in France’s elections on July 7.

If neither the far-right National Rally, led by Marine Le Pen, nor the New Popular Front left-wing alliance have the upper hand in the new parliament, analysts doubt the legislature could implement extreme, economically damaging policies. So amid political uncertainty, they see a chance that the economy will be unscathed.

In terms of the election’s effects on the economy, Mohit Kumar of Jefferies investment bank wrote: “The result is probably better than feared, but not as good as the status three weeks ago pre-elections.”

Amid optimism, the CAC 40, the main Paris Bourse stock index, made gains of over 2%. Every stock in the index increased in value. Gains were also seen in the German Dax, the London FTSE, and the Warsaw WIG.

Meanwhile, the euro initially rebounded against world currencies, achieving the highest valuation in two weeks, up 2.5% against the dollar, before slipping back.

Among currencies affected by the resurgence of the euro on Monday was the Polish zloty, which slipped below €4.30 for the first time in a week, before recovering part of the losses.

The results of the first round of France's parliamentary elections on Sunday, which was won by the National Rally, were not the only focus of those trying to fathom the direction of the European economy this morning.

The Purchase Managers’ Index (PMI) showed that the gloom overshadowing manufacturers is still to lift, with readings of below 50 in most European countries.

The PMI is a reading of the behavior and mood of people making decisions on buying materials, labor, and services for companies in the industrial sector. It is useful to economists in gauging whether industry is likely to grow or contract. A reading below 50 is seen as “pessimistic”, while one above 50 is “optimistic”. In Poland, the June PMI reading by analysts at S&P remained at the same level as May – 45 points, which observers note is the 26th month of a negative outlook for industry.

The last PMI figures for France, released on June 21, showed manufacturing PMI decreasing to 43.5 from 46 a month earlier.