Europe’s stock markets diverged Monday in a muted response to the US government shutdown, and despite hopes that German

Chancellor Angela Merkel will be able to form a new administration.The Frankfurt and Paris stock markets edged lower in late morning deals,
but London bobbed into positive territory.

“Stock markets in Europe are a mixed bag … as investors assess the political landscape,” said CMC Markets UK analyst David Madden.

“The shutdown of the US government has not spooked investors as there was a similar muted reaction the last time it happened in 2013, but nor has it given traders a reason to buy into the market.”

In the eurozone, Germany’s centre-left Social Democrats voted Sunday to begin formal coalition talks with Chancellor Angela Merkel’s conservatives.

The news, which brought Europe’s top economy a step closer to a new government after months of deadlock, helped guide the euro higher.