The political change following a major defeat of the ruling Social Democratic Party (SPD) had a positive impact on the Frankfurt stock market on Monday.

The blue chip DAX index was up by 1.06 percent to 4,406 points in Frankfurt. The mid-caps index of MDAX climbed 0.50 percent to 5, 862 pints.

Business and trade union leaders have said that a government change means major economic reforms would be implemented more quickly and they welcomed German Chancellor Gerhard Schroeder's call for an early national election, according to German media reports.

"The best thing for the economy is a change in government," said Rainer Guntermann, senior economist of Dresdner Kleinwort Wasserstein.

Ludwig Georg Braun, president of the German Association of Chambers of Commerce and Industry, said the country could not afford to have the political uncertainty drawn out until the end of next year.

HVB AG, Germany's second largest bank, said that the announcement of an early ballot will "inspire the fantasy of new reforms and have a positive impact on the stock market."

Hubertus Schmoldt, the chairman of Germany's Mine, Chemical and Power Union, said it was now up to Germans to decide which course they wanted to take.

"Germany needs a strong government. Therefore the decision to bring about new elections should be grasped," said Bernd Bottschalk, the president of Germany's Automotive Industry Association.

Schroeder called on Sunday for early elections one year in advance after his party suffered a defeat in a legislative election in North Rhine-Westphalia, the most populous state in Germany.

"It is my obligation and responsibility to call new elections as early as possible," Schroeder told reporters in Berlin.

"My party's bitter defeat in North Rhine-Westphalia has raised questions over the political basis of our work," Schroeder said, noting "a clear majority of support by Germans is absolutely necessary."

He said this autumn will be a realistic time for early elections, one year earlier than planned. He added he will consult with German President Horst Koehler on the election date.

Parliament President Wolfgang Thierse, an SPD member, said he saw no legal hurdle for an early vote. "Given that there is a broad political will, it is possible," he said.

However, the decision to hold an early election is indeed a gamble for the SPD.

In a flash poll conducted following Sunday's election, 70 percent of those asked said they thought that a fresh ballot this year would be more beneficial to the opposition than the ruling coalition of the SPD and the Green Party.

Other polls also show that the opposition Christian Democratic Union (CDU) would win in nation-wide elections.

The SPD has only 29 percent of support, according to the Infratest Dimap poll of 675 voters conducted for WDR television after the chancellor's announcement on Sunday.

In sharp contrast, the CDU and its partner, the Christian Social Union (CSU), have a support of 46 percent, enough for a majority in the lower house of parliament.

In Sunday's election in North Rhine-Westphalia, the SPD netted only 37.1 percent of votes while the CDU got 44.8 percent.

Source: Xinhua