German stocks outperformed European peers on news that the government collapsed last Wednesday, another sign of a more positive mood taking hold - just hours after Donald Trump's U.S. election win raised the threat of tariffs in a fresh blow to Europe's biggest economy.

The decision follows a budget fight that prompted Chancellor Olaf Scholz to fire his finance minister and announce a confidence vote that is widely expected to fail.

Germany’s ruling coalition led by Chancellor Olaf Scholz imploded after months of infighting between his center-left Social Democrats, the climate-focused Greens and the pro-business Free Democrats. The unusual three-way alliance was formed in 2021 with sweeping ambitions to modernize Europe’s largest economy.