A look at the day ahead in European and global markets from

Ankur Banerjee

European markets are poised for a strong start to the second

half of the year after the first round of voting in France put

the far-right National Rally (RN) party ahead, but with a

smaller share than some polls had projected, lifting the euro to

a two-week high.

Exit polls, which were in line with the opinion surveys,

showed Marine Le Pen's RN party emerging ahead in the first

round, winning around 34% of the vote, comfortably ahead of

leftist and centrist rivals.

The chances of eurosceptic, anti-immigrant RN winning power

next week though remain uncertain, and will depend on the

political dealmaking by its rivals over the coming days, with

horse-trading already under way.

The better-than-feared results lifted the euro, with the

single currency touching a two-week peak of $1.076175, while

stocks futures climbed 1% and French OAT (bond) futures

gained 0.12%.

The broader French market will likely get a boost,

especially as the blue-chip CAC 40 index has dropped 6%

since French President Emmanuel Macron dissolved parliament.

Analysts though point out that the week may still be

volatile as the RN could gain a majority in next Sunday's

runoff.

Traders and markets are concerned that the far-right, as

well as the left-wing alliance that came second on Sunday, have

pledged big spending increases at a time when France's high

budget deficit has prompted the EU to recommend disciplinary

steps.

Beyond France, the UK is also gearing up for the general

elections on Thursday, with the opposition Labour Party expected

to win in a landslide victory.

While sterling has bounced around in June, dropping

nearly 1% in the month, the currency's future depends on the

next government convincing skittish investors that its plans to

fix a stagnant economy are credible.

Key developments that could influence markets on Monday:

Economic events: Germany's June inflation, PMI data for

June from euro zone and Germany