European equity benchmarks were rallying on Monday as traders digested media reports that German Chancellor Angela Merkel plans to step down as head of her ruling political party, the Christian Democrat Union (CDU), before the end of the year.

Merkel, who successfully led her party to four back-to-back victories in countrywide elections, has led the Euronze's largest economy as Germany's Chancellor since 2005. The news in German media on Monday that she plans not to seek re-election during the CDU's upcoming convention in December comes after her ruling coalition experienced some losses during state elections on the weekend. Merkel does, however, intend to continue as Chancellor, according to news reports.

In equities, health care company Grifols was leading the gainers on the pan-European Stoxx 600 Index, up by 10% after the company presented promising medical results over the weekend for its Alzheimer treatment approach AMBAR.

German telecommunication services provider I & I Drillisch, 6.2% higher and software vendor Nemetschek, up by 5.7%. Decliners on the index included Spanish bank Bankia, down by 4.9%, Compagnie Plastic Omniu, an automotive components company 4.4% lower and Just Eat, an online food delivery platform down by 3.5%.

The pan-European Stoxx 600 Index was 1.01% higher, London's FTSE 100 Index was up by 1.26%, Frankfurt's DAX was 1.39% higher and Paris' CAC-40 was up by 0.26% at the time of writing.

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