European Shares Rebound as U.S. Rate Cut Hopes Rise

European shares rose as investors grew optimistic about potential U.S. interest rate cuts following comments by Federal Reserve official John Williams. The STOXX 600 index increased by 0.6%, with financials leading. Peace talks involving the U.S. and Ukraine influenced defense stocks and international market dynamics.

European shares rebounded on Monday, led by the financial sector, as market optimism grew over potential interest rate cuts in the United States. This optimism stems from U.S. Federal Reserve policymaker John Williams suggesting a possible rate reduction in the near future, prompting a 0.6% rise in the pan-European STOXX 600 index.

The index had previously recorded its steepest weekly drop since July, but investors embraced Monday's gains, driven by expectations for a rate cut at the Fed's December meeting. However, caution persists as some policymakers stress the need for clarity regarding U.S. economic health before confirming more rate cuts.

Market attention also turned to the U.S. and Ukraine, as they work on modifying a peace plan perceived as initially too favorable to Moscow. European defense stocks took a hit amid this progress, while Bayer's shares soared after positive results for its anticoagulant drug. Investors are also watching the British annual budget and U.S. economic indicators closely this week.

(With inputs from agencies.)