The DAX climbed 1.9% to reach 25,517 points, setting a new all-time high for the first time since January.
The German benchmark's ascent marks a significant milestone, reversing a steep decline that saw the index fall to approximately 22,300 points in late March amid geopolitical tensions linked to the Iran conflict.
The rally was primarily driven by a sharp drop in oil prices, which has alleviated near-term inflation concerns for European investors.
Lower energy costs have improved the outlook for corporate margins and consumer spending, providing a tailwind for equity valuations across the region.
This move underscores the sensitivity of European equities to energy market dynamics.
As oil prices retreat, the pressure on the European Central Bank's inflation mandate eases, potentially opening the door for a more dovish policy stance in the coming months.