Europe midday: Shares extend gains as traders eye German election results

(Sharecast News) - European shares were up on Tuesday as investors assessed the impact of Germany's federal election results and defence stocks in focus again amid hopes of higher government spending on weapons amid geopolitical tensions. The pan-regional Stoxx 600 index was up 0.33% at 555.2. Germany's DAX down 0.14% and Britain's FTSE 100 up 0.13%.

Germany's Christian Democratic Union/Christian Social Union alliance has started talks on forming a government with the defeated Socialist Party having won the largest share of votes in Sunday's election on Sunday.

CDU leader Friedrich Merz is set to take over from Olaf Scholz as chancellor and called for Europe to make itself more independent of the US in the wake of what he called "indifference" from the new administration of Donald Trump in Washington.

His remarks boosted defence shares, such as Rheinmetall, Dassault and Thales as any move away from military reliance on the US would require an increase in defence spending by European nations as a share of GDP.

In economic news, Germany's economy contracted 0.2% quarter-on-quarter in the final three months of 2024, the country's Federal Statistical Office said on Tuesday, confirming a flash reading in January.

In other equity news, shares in UK-based medical equipment maker Smith & Nephew gained after a rise in annual sales and profits.

Shares in Galp Energia surged after the company confirmed a new discovery at its Mopane-3X well off the coast of Namibia.

Reporting by Frank Prenesti for Sharecast.com