Stocks Higher in Europe but Euro Declines

European stocks were mostly higher Monday as investors brushed aside France’s vote to reject the European Union constitution, but the euro currency continued to sink, hitting fresh seven-month lows.

The “no” vote garnered 55%, higher than in most polls before Sunday’s referendum, in one of the biggest turnouts in years.

Still, the main French stock market index, the CAC, inched up 3.04 points, or less than 0.1%, to 4,134.87.

Germany’s DAX index rallied 35.72 points, or 0.8%, to 4,480.43, its highest close since 2002. The Spanish market rose 0.9% and the Italian market gained 0.5%.

Trading was thin, however, with Wall Street and British markets shuttered for holidays.

Although France’s rejection of the EU treaty was not expected to jeopardize the monetary union underpinning the single currency, it did raise questions about public support behind the EU and future economic integration.

It also plunged France into political turmoil just a week after Germany’s Chancellor Gerhard Schroeder called for early elections after his party suffered defeat in a regional poll.

The euro slid to $1.248 in European trading, down from $1.258 on Friday in New York and the lowest since Oct. 15. The euro hit a record high of $1.36 on Dec. 30.

Dutch voters go to the polls Wednesday amid widespread expectations for another “no” verdict on the constitution, which must be ratified by all member states to take effect.

Analysts pointed out that political uncertainty in the euro zone was rising at a time when the economy was showing increasing signs of weakness.

Data last week showed German business confidence at its lowest in almost two years and industry groups are calling on the European Central Bank to cut interest rates to stimulate sluggish domestic demand.

“Weak growth, political problems, and a ‘no’ vote in the referendum means there is not much positive news out of the euro zone,” said Jonas Ahlander, chief foreign exchange strategist at SEB Merchant Bank in Stockholm.

Even so, European stocks could be helped in the short term by the weak euro, because the currency’s slide makes the Continent’s exports cheaper for U.S. buyers, analysts said.

In other trading Monday, Japan’s Nikkei-225 stock index rose 74 points, or 0.7%, to 11,266.33. Canada’s main market index gained 53.84 points, or 0.6%, to 9,673.20. The main Mexican index added 30.39 points, or 0.2%, to 13,161.78.