European Markets Close Strong in 2025 with Banking Sector Leading Gains

European stock markets closed a strong 2025 near record highs, propelled by the banking sector's impressive 67% gain and significant advances in defense stocks. Spain's IBEX index outperformed, set for nearly a 50% increase, amid shifting investment dynamics and strategic fiscal policies across the continent.

As 2025 draws to a close, European stock markets have ended the year on a high note, bolstered by considerable gains in the banking and defense sectors. The banking sector is notably marking a 67% rise, the most significant increase since 2008, driven by mergers, acquisitions, and a favorable regulatory environment.

Spain's IBEX index emerged as a standout performer, poised for a nearly 50% gain, as European investors continued to diversify their portfolios amid a shifting financial landscape marked by lower U.S. tech stock appeal and Germany's fiscal initiatives.

Although activity was subdued due to the holiday season, with various exchanges operating on reduced schedules, European equities remained resilient. Analysts predict that, despite expected volatility, this upward trend should carry into early 2026.

(With inputs from agencies.)