A narrow election win for Greece's pro-bailout party New Democracy cheered investors today in the hope that the embattled country has bought more time to remain in the euro.
The FTSE 100 Index in London opened more than 1% higher after the party, led by Antonis Samaras, secured 29.7% of the vote while anti-austerity group Syriza gained 26.9%.
The result, which saw Asian markets and the Dax in Germany rise more than 1%, meant a Greek exit from the euro - a major threat to global financial stability - was no longer an imminent threat. The euro rallied against most major currencies.
David White, a trader at Spreadex, said: "Last night the people of Greece kept the future validity of the eurozone alive."
Banking shares were among the biggest risers, with Lloyds Banking Group up 2%, Barclays ahead nearly 2% and Royal Bank of Scotland 1% stronger.
However David Cameron signalled on Monday that the election had done little to resolve the long-term problems within the eurozone, suggesting Europe faces "perpetual stagnation" or a break-up of the single currency.
The Greek election was held against a backdrop of increased economic turmoil across the eurozone, with the likes of Spain and Italy seeing their borrowing costs soar as investors lose faith in the countries' abilities to control their finances.
Greece has had to adopt a range of far-reaching austerity measures as a condition of receiving rescue loans from the European Union and International Monetary Fund.
The Greek people have reacted angrily to the conditions, fuelling a surge in popularity for parties like Syriza that have argued against the country's bailout terms.
Without the EU bailout cash, Greece would go bankrupt and probably have to leave the 17-country bloc.
But uncertainty remains, as conservative New Democracy did not win enough seats to form a majority and must now enter talks to form a coalition. World leaders have urged Athens to act quickly.
Mr White warned: "No sooner than when one set of questions marks have been removed, the next set appear.
"Markets, though welcoming of the result, will immediately turn to discounting news flows leading up to the announcement of whether a coalition can be formed, making even a positive outcome potentially volatile should the political process stall."
The price of gold fell to 1,617 US dollars an ounce as investors ditched safe-haven investments in favour of riskier assets as confidence improved.
Volatile mining stocks also benefited from the more positive sentiment, with Kazakhmys, Evraz and Antofagasta all rising around 2%.
According to the Greek Interior Ministry, New Democracy won 29.5% of the vote.
New Democracy's win could be vital for the future of the eurozone
Behind them the left-wing Syriza party took 27.1%. The former ruling party Pasok secured 12.3% of the vote. The projection would mean New Democracy wins 127 seats, Syriza 72 and Pasok 32.
New Democracy leader Antonis Samaras said: "The Greek people today voted for Greece to remain on its European path and in the eurozone," and promised "policies that will bring jobs, growth, justice and security".
The pro-bailout party is now likely to be asked to form a government in coalition with Pasok, or a grand coalition with both Pasok and Syriza, although the latter are less likely to be willing to join a national agreement having campaigned against the eurozone austerity measures.
To form a coalition government, a majority of 151 seats would be required and both Pasok and New Democracy have said they are willing to work with the eurozone nations to stay within the currency union.
The winning party receive an additional 50 seats in the 300-seat parliament.
Following announcement of the projections, Greek socialist Pasok party chief Evangelos Venizelos proposed a unity government of four parties.
Greeks go to the polls:
