Frankfurt's DAX 40 rose more than 1% to a record high of 25,910 points in the first trading session of August, as a sharp drop in oil prices lifted risk appetite by easing concerns over inflation and higher interest rates.
Crude prices fell on hopes of renewed US-Iran talks after President Donald Trump said negotiations would begin on Monday, though he gave no deadline for a deal.
Markets were also supported by mostly upbeat corporate earnings and a continued recovery in global AI-related stocks.
Corporate news was limited ahead of a busier earnings calendar later this week.
Stabilus gained more than 1% after its detailed quarterly results confirmed preliminary figures, while E.ON rose 1.5% after Jefferies upgraded the stock to "Buy" from "Hold" and raised its price target to €22.70 from €17.40.