European Stocks Reach New Heights Amid Defense Spending Boost

European shares neared record highs driven by defense stocks, after leaders agreed to increase defense spending and propose a Ukraine peace plan to the U.S. The STOXX 600 index rose 0.4%, while defense stocks surged. Meanwhile, Germany's index outpaced others, with the ECB meeting in focus amid tariff tensions.

European shares approached record highs on Monday, buoyed by a rise in defense stocks following a decision by European leaders to increase military spending and propose a peace plan for Ukraine to the United States.

The pan-European STOXX 600 index rose 0.4% by 0811 GMT, continuing a streak of ten consecutive weeks of gains. The aerospace and defense sector led the charge, climbing over 6% to reach a new pinnacle, as leaders underscored the need for greater self-reliance in defense to demonstrate capability to the U.S.

Among the top performers, Rheinmetall soared 17.4%, BAE Systems rose 11.6%, and Leonardo gained 15.1%. Furthermore, speculation about a potential defense fund in Germany, reported by Reuters, added to the momentum. Germany's blue-chip index outpaced its counterparts, gaining 0.9%. Attention is now turning to the European Central Bank's upcoming policy meeting, especially amid looming uncertainties over proposed 'reciprocal' U.S. tariffs on the EU.

(With inputs from agencies.)