18th June 2012
According to the BBC, France's main Cac index was up 1.8%, while Germany's Dax added 1.5%.
Asian shares had earlier also advanced with Japan's Nikkei 225 index and South Korea's Kospi both closing up 1.8%, while Australia's ASX 200 added 1.9%.
The UK's FTSE 100 was up 1.3%.
Market analysts warned however, that there were still lots of obstacles ahead and the initial burst of positive market reaction could prove to be short-lived.
Keith Wade, chief economist at Schroders confirmed saying, "after an initial rally, equities have fallen back".
He follows say: "Progress is unlikely to be straightforward and we would not be surprised to see doubts raised once more about euro membership, particularly as the economy is likely to remain mired in recession and the party with momentum in Greece is the anti-austerity Syriza, which made further gains at the weekend and is now the clear opposition. Furthermore, the troika will also be wary of conceding too much to Greece knowing that Ireland and Portugal will be watching and comparing the terms of their bailouts. However, Greece can be managed in the near term if the political will is there to provide funding."
While Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities in Tokyo said: "It's a temporary rally but we're seeing broad gains because the global situation has changed now that the prospect of a 'Drachmageddon' has disappeared."
Dominic Schnider, executive director for wealth management research at UBS also had the same sentiments: "I'm not sure the rally is going to last long. The problems are still there, you still have huge fiscal issues and it's not just Greece, it's Spain and others."
The result which will give some respite to EU policymakers, gave the centre-right New Democracy party 29.7% of the vote, while the radical left coalition Syria party led by Alexis Tsipras was close behind with 26.9%.
Crisis not over
Larry Elliot, the economics editor of The Guardian says the situation in the eurozone, and around the world, was catastrophic before Sunday's second Greek election. "The result changes little."
He adds that anybody expecting the G20 to pull another rabbit out of the hat at this week's summit meeting in Mexico simply hasn't been paying attention. "Leaderless and at odds over what needs to be done, it has taken the G20 less than four years to become as redundant as the G8 it was supposed to replace."
"At root, the current crisis is the result of the imbalances in the global economy, which in turn reflect differences in productivity and competitiveness. To tackle Europe's problem therefore means tackling the competitiveness question."
"Until policy makers are ready to tackle the structural issues, damage limitation is all there is."
Similarly, in the English edition of the French daily newspaper Le Monde, Costa Lapavitsas writes:
"The true cause of the eurozone crisis is cumulative loss of competitiveness by peripheral countries, not fiscal indiscipline."
Lapaviysas points out that the "contradictions" between monetary and fiscal policy in the eurozone lies in the absence of a unitary or federal European state. "Europe remains a continent of nations overlaid with an economic structure that pretends nations do not matter. Yet nation states have remained integral to the EMU. This reality is fundamental to the eurozone crisis and makes its resolution very hard."
The gains were not only confined to stock markets. The euro rose almost 1% against the US dollar, hitting a one-month-high of $1.2748, while Brent crude was up 1.5% to $99.11 per barrel.
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