In mid-day trading Monday, Germany's blue-chip stock market index DAX soared to 8,626 - up 1.3 percent from Friday, and surpassing its previous all-time high of 8557 points recorded in May this year.

The MDax index of small and mid-sized companies also rose to a new record, reaching 14,980 points.

Demand for German equities was high amid a global stock market rally that saw shares gain substantially in Asia, as well as in European markets. Stock futures for the S&P 500 and Dow Jones industrial average in the United States also climbed.

Boosted by Summer's withdrawal

Analysts said investors' appetite for risk had increased after former US Treasury Secretary Lawrence Summers on Sunday announced he would pull out of the race for the chairmanship of the US Federal Reserve Bank.

The withdrawal created fresh hope for a continuation of easy monetary policy at the central bank, Daniel Saurenz, analyst with Feingold Research, told German dpa news agency.

Analysts take the view that the US Fed will take a more gradual approach to tightening its monetary policy, now as Summers has withdrawn from the race and current US Fed Vice Chairwoman Janet Yellen remains the only remaining candidate.

“The perception is that Yellen is likely to be more dovish and that we are going to get some modest tapering with monetary stimulus going to remain intact to a sizeable extent,” Peel Hunt equity strategist Ian Williams told Reuters news agency.

Currently, the US Fed uses a bond-buying program to pump $85 billion (63 billion euros) per month into financial markets to boost the recovery in the United States. However, current US Fed chairman Ben Bernake said earlier this year that the program would taper off beginning in September.

uhe/ipj (dpa, Reuters, AFP)