London's FTSE 100 Index opened 0.8% higher at 5396.70, Germany's DAX increased 1.3% points to 6425 and Paris's CAC 40 Index gained 1.1% to 3082.36.
Investors seemed to take some comfort from four separate polls released over the weekend, all of which showed that Greece's conservative party, New Democracy, is now ahead of anti-bailout party Syriza. The rise in support for the conservatives would enable the party to form a government with the socialists Pasok that would be committed to keeping Greece in the euro zone.
"There will be some relief reverberating through markets at the news," said Crédit Agricole Corporate & Investment Bank. "While the Greek election is still some weeks off, suggesting that uncertainty will not ease quickly, this news will allay fears of a quick 'Grexit', it said.
Still, worries about Spain, and in particular its banking system, will keep investors on their toes. Late Friday, Standard & Poor's cut its ratings on five Spanish banks and said the country is entering a double-dip recession that will lead to a large increase in troubled assets.
Meanwhile, investors will have to digest news that Spain plans to inject €19 billion ($23.78 billion) into troubled lender Bankia, a move that would effectively nationalize the country's third-largest bank. Although a capital injection had been expected for days, the scale of the action went beyond what most analysts had estimated. On Sunday, a government spokesman said that instead of pouring cash into the bank, it could give Bankia debt certificates from the Treasury or the Fund for Orderly Bank Restructuring. Bankia would then be able to use this debt as collateral, with the European Central Bank to cover its liquidity needs.
Adding to jitters was a report over the weekend by Spanish newspaper El Mundo, which said the Spanish government may consider tapping the euro zone's temporary rescue fund, the European Financial Stability Facility, to help the banking sector. The government estimates it will have to inject at least another €30 billion to clean up and recapitalize three more banks, on top of the €19 billion for Bankia, said the newspaper.
Monday's session will be fairly quiet, with the U.S. market closed for Memorial Day. Meanwhile, several European countries, such as Germany and France, will observe the Whit Monday holiday. With little in the way of economic news to look out for, investors will eye an Italian auction of €2.5 billion-€3.5 billion of a new series of zero coupon notes, and €500 million-€750 million billion of inflation-linked bonds.
On Wall Street Friday, stocks fell ahead of the long holiday weekend as reports of weakness in Spain underlined anxiety about the euro zone, outweighing a better-than-expected reading on U.S. consumer confidence.
The Dow Jones Industrial Average fell 0.6% to 12454.83, the Standard & Poor's 500 stock index dropped 0.2% to 1317.82 and the Nasdaq Composite fell 0.1% to 2837.53.
In Asia, stock markets were mixed Monday as investors weighed news of political progress in Greece, against Spain's deteriorating financial situation.
Japan's Nikkei Stock Average was flat, Australia's S&P/ASX 200 climbed 0.8%, Hong Kong's Hang Seng Index added 0.3% and China's Shanghai Composite Index was flat.
In the European foreign exchanges, the euro was higher against the dollar, boosted by the Greek poll results. The common currency was recently trading at $1.2601, from $1.2518 late Friday in New York. The dollar was at ¥79.37 from ¥79.68.
Among commodities, spot gold was at $1579.60 a troy ounce, up $7.00 from New York, while July Nymex crude oil futures were up 86 cents at $91.73 a barrel and July Brent futures were up 73 cents at $107.56. The June bund contract was down 29 ticks at 143.94.
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