European Markets Surge: STOXX 600 Hits New Heights, FTSE 100 Breaks Records

European shares rallied as the STOXX 600 index neared 600 points and London's FTSE 100 hit 10,000 for the first time. Defence stocks led this rise, supported by banking and basic resources sectors. Meanwhile, euro zone factory activity showed signs of contraction at the end of 2025.

In a robust start to 2026, European shares climbed to a new peak, driven by strong performances in the defence sector. By mid-morning, the STOXX 600 index edged closer to the notable 600-point level as investors returned to markets after New Year festivities, resulting in a 0.6% gain to 596.94.

The positive momentum followed an impressive 2025, bolstered by reduced interest rates, Germany's fiscal incentives, and a shift away from high-valued U.S. tech stocks. The market showed resilience despite last year's tariff upheaval, as investors adjusted to uncertainties initiated by comprehensive tariff impositions from the U.S.

London's FTSE 100 achieved a significant milestone, crossing the 10,000 mark. Nick Saunders, CEO of Webull UK, highlighted rising commodity prices as a key factor attracting investor interest. While markets celebrated, euro zone manufacturing data pointed to new challenges with production levels declining for the first time in a decade-long span.

(With inputs from agencies.)