Thousands of people, including European royalty, thronged Luxembourg Friday to witness the enthronement of Grand Duke Guillaume as monarch after his father, Henri, officially abdicated ending a 25-year reign in the small EU nation.

Wearing a green military uniform topped by a yellow sash, Guillaume, 43, formally acceded to the throne of the wealthy country during a ceremony at the parliament.

"I want to be the grand duke who builds bridges between generations, between tradition and innovation," he said, after taking the oath of service before lawmakers and foreign dignitaries.

His father, in a matching uniform, appeared emotional as he listened to his son's inauguration speech.

After the ceremony, the new grand duke and his wife, Stephanie, greeted the public from the balcony of the Grand Ducal Palace, waving as some in the crowd chanted his name.

Henri, 70, formally signed his abdication at the same palace in the presence of guests including the Dutch and Belgian royal couples.

"This role was not one you chose. It has been yours by birth. But the people of Luxembourg -- all of us -- could not have wished for a better sovereign," Luxembourg's Prime Minister Luc Frieden told him during the abdication ceremony.

'Very excited'

The European nation of about 680,000 people lit up with pomp and pageantry as foreign dignitaries flocked to the financial hub for the celebrations.

Thousands gathered to watch guests, including European Parliament chief Roberta Metsola and European Council President Antonio Costa, walk a red carpet covering the short distance between palace and parliament after the abdication, television footage showed.

Some waved Luxembourg's red, white and blue flag as a military band played.

"I am very excited about these festivities," said Nicolas Graas, a local businessman, adding that for weeks he has been telling friends of his American wife to make sure to tune in for the occasion.

"They should be sure to watch television because, for once, there will be a lot of talk about Luxembourg," he said.

French President Emmanuel Macron and his German counterpart Frank-Walter Steinmeier are among those expected to attend a gala dinner in Luxembourg City.

Guillaume will be the seventh sovereign of the House of Nassau-Weilburg, which has reigned over Luxembourg since 1890 and shares its lineage with the Dutch royal family.

The father-of-two is not expected to shake up the small monarchy, where the head of state promulgates laws and performs representative functions.

But observers say he could bring a more personal approach to the Grand Duchy.

No 'whirlwind of modernity'

"The new grand duke is 30 years younger than his father and was educated in Luxembourg schools, unlike his father, who had private lessons," Frieden, the prime minister, told AFP.

"So it will be a new style, perhaps more open, but in line with that of his father and grandfather."

Guillaume is the eldest of five children born to Henri and Grand Duchess Maria Teresa -- the Havana-born daughter of a wealthy Cuban businessman, who lived in exile in Switzerland.

"With his mother being Cuban, we can imagine that he will have a more Latin approach, perhaps a little warmer," Belgian historian and monarchy expert Patrick Weber said.

"But I don't really expect a whirlwind of modernity," he added.

Henri launched the transition last year, saying he wished to "slow down" and regain "a certain freedom" after a quarter of a century on the throne.

Guillaume studied in Luxembourg and Switzerland before attending Sandhurst Royal Military Academy in Britain.

He went on to earn a double degree in arts and political science from the University of Angers in France.

Guillaume has been married since 2012 to Countess Stephanie de Lannoy, who hails from a noble Belgian family and is known to be passionate about art and literature and speaks French, Luxembourgish, German and English.

The couple has two sons: Charles, five, and Francois, two.

Celebrations for his accession are planned throughout the country until Sunday.