Traders said the transition to the euro was smooth but tentative. The volume of shares traded was low, a reflection of both caution and the absence of investors because of school holidays in many countries on the continent.

But this hasn't stopped investors bidding up the prices of leading shares. "There's a bit of 'europhoria' in the market after the new currency's confident debut on foreign exchange markets," said Joerg Pruessmeier, head of equities sales at Merrill Lynch.

After an initial fall, Frankfurt's floor-traded Dax index was up 185 points or 3.6%, at 5,187 by 1200 GMT. Trade on the leading continental bourse began at 0830 local time (0730 GMT) as normal without any technical problems.

Paris' Cac 40 had index jumped 152 points or 1.67% to 4,094. In Milan, the blue chip MIB30 was up 3.4% at 36,347 while Zurich's SMI was up 2.8% or 203 points at 7,363.

DaimlerChrysler, the most heavily weighted stock in the Dax index, was up 3.60 euros, or 4.3%, at 87.20.

Traders cautious

One trader said: "The open came off very smoothly. The market is still a little nervous and that is reflected in the low volume of trades."

Expected ongoing gains in the value of the euro against the US dollar in initial currency trade did not materialise and so didn't hurt Germany's export-sensitive share market.

The euro was up against last week's fixing towards the US dollar, but was down slightly at $1.1795 in midday trade compared to the strong overnight gains in Asia.

London link-up

This session also marks the start of links between the London and Frankfurt stock exchanges with traders in each centres now able to buy and sell stocks on the electronic trading platforms of the other.

On the floor of Frankfurt's stock exchange, traders reported no technical difficulties relating to the Boerse-LSE information-sharing alliance or the introduction of the euro.

The higher turnover on each market this should bring is expected to create higher liquidity - where investors are able to find buyers and sellers more easily - but there was little sign of much early effect, traders said.

The Deutsche Boerse said it would provide details "within the next few weeks" of the next step in the alliance.

"Today is just the first step toward a pan-European stock exchange," Reto Francioni, a Deutsche Boerse executive board member said in an interview at Frankfurt's stock exchange.