Defence stocks drag European shares down after aborted Russian mutiny

European shares fell on Monday, with defence stocks leading declines after an aborted mutiny in Russia over the weekend, while financial stocks dragged on mounting concerns of global interest rates staying higher for longer.

European shares fell on Monday, with defence stocks leading declines after an aborted mutiny in Russia over the weekend, while financial stocks dragged on mounting concerns of global interest rates staying higher for longer. The pan-European STOXX 600 index was down 0.4% by 0828 GMT, at a three-month low and extending losses to the sixth straight session.

Russia sought to restore calm on Monday after an aborted mutiny by Wagner Group mercenaries over the weekend, while Western allies assessed how President Vladimir Putin might reassert authority and what it could mean for the war in Ukraine. Shares of major European defence firms Leonardo SpA , Saab AB and Rheinmetall AG dropped between 5% and 6%, weighing the European aerospace and defence sub-index down 2.0%.

The banking index was also a big drag, down 1.3%, while miners were a bright spot, up 0.1%, tracking prices of gold and other metals. "Investors are adding some balance to their portfolios and taking more defensive positions as geopolitical developments bring fresh winds of uncertainty," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"The unstable political situation in Russia (has added) to uncertainty surrounding the prospects for the global economy." The STOXX 600 has come under pressure on concerns about an economic slowdown from a potentially longer-than-expected global rate hiking cycle. The index logged its biggest weekly percentage drop in three months on Friday at the end of a central bank event-heavy week when data pointed to weak European business growth in June.

Germany's DAX index was down 0.4% on Monday after a survey showed business morale in Europe's largest economy worsened for the second consecutive month in June. Shares of Deutsche Bank fell 2.0%. Reuters reported that the bank told clients it can no longer guarantee full access to Russian stocks that belong to them.

Among other stocks, shares of Aston Martin rose 9.5% to a one-year high after the British luxury carmaker said it would enter an agreement with Lucid Group to make "high performance" electric vehicles. (EVs). Cineworld Group dropped 16.6% after the British cinema chain operator said it will file for administration as part of a proposed restructuring plan.

Shares in SBB climbed 17.1% after the Swedish real estate company entered talks to sell the remaining 51% of its education subsidiary.