LONDON: German stocks climbed to their highest in around one month on Monday as investors bet the euro's weakness against the US dollar would help German exporters.
The DAX ended up 0.5 percent at 10,333.23 points as the euro fell after Federal Reserve Chair Janet Yellen said late on Friday the Fed should raise interest rates "in the coming months" if the economy picks up as expected and jobs continue to be generated.
Some analysts said the market would keep a close eye on economic indicators for the market's direction in the near term.
"The pulse for this argument is very much dependent on the economic data," said Naeem Aslam, chief market analyst at Think Markets.
"If the economic data doesn't confirm that the economy is in a shape to withstand another rate hike, then traders may just reverse their positions."
The euro zone's Euro STOXX 50 index rose 0.4 percent and France's CAC added 0.3 percent.
Volumes were thin with both London and New York markets closed for holidays.
Analysts and fund managers said the recent rally in European equities could fade if the impetus from a weak euro fades. A weaker euro makes European goods cheaper overseas and competing foreign goods more expensive.
"The return to US rate hike expectations have re-opened the possibility of short-term outperformance for European stocks, but a dollar stuck in a range can hardly create a durable momentum of outperformance," said Didier Duret, global chief investment officer at ABN-AMRO Private Banking.
Among other movers, Dutch mail operator PostNL rose 3.5 percent following Belgian rival BPost's failed attempt to take over the company.
The companies said on Friday they had discussed a friendly public offer by Bpost for all of the shares of PostNL but had failed to agree terms for a deal.
Some traders said although the talks did not proceed, the approach raised the prospect of other takeover attempts in the future.
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