Euro zone bond yields nudged down and the Dax rose after Germany moved a step closer to resolving the country's political impasse. As Sonia Legg reports, leaders of German Chancellor Angela Merkel's conservative party agreed on Sunday to pursue a ''grand coalition'' with the Social Democrats to break the political deadlock in Europe's biggest economy.
The gesture was welcome after a tough week And just hours after Angela Merkel said she'd like to get a government in place quickly there was a breakthrough. The Social Democrats agreed to new talks. It means another "grand coalition" is back on the agenda, although the Christmas lists are long. (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "We have to tackle the hot topics: infrastructure, digitalization, the reduction of bureaucracy. A government that only keeps doing what it has been doing for the last four years - to manage. Please not." The Dax has remained relatively stable throughout the political crisis - largely thanks to the strength of Germany's economy. But the euro suffered several falls last week. The prospect of new talks gave it a welcome boost to a two-month high against the dollar. Euro zone bonds yields fell too. (SOUNDBITE) (English) JAMES HUGHES, CHIEF MARKETS ANALYST, AXITRADER, SAYING: "It's really important that we get something done and we don't go into December and into the new year expecting to see more elections." But agreeing to talks is the easy bit. Satisfying parties from the left and right may take time. (SOUNDBITE) (English) JAMES HUGHES, CHIEF MARKETS ANALYST, AXITRADER, SAYING: "I think the biggest issue that we have is that the parties are quite a long way away and it's a matter of getting over a lot of that middle ground that is going to be one of the biggest hurdles that we have here." And disappointment it looks like patience will be needed. A government official says talks may not even begin until next year.