Europe midday: Stoxx nears new record with arms makers in focus

(Sharecast News) - European shares nudged towards fresh record highs on Monday as the rift between Europe and the US over the future of Ukraine boosted shares in weapons makers. The pan-regional Stoxx 600 index was up 0.33% at 554.26 points just below the record high of 554.61, with major bourses mostly higher. Traders were expecting a light day of trading with US financial markets closed on Monday for the Presidents Day holiday.

French President Emmanuel Macron has convened an emergency meeting in Paris with fellow continental leaders to formulate a response to US President Donald Trump's attempt to sideline them and Ukraine from talks with Russia to end the war.

The US administration said it would hold direct talks with Russia leader Vladimir Putin to end the war, excluding Kyiv from any discussion and apparently allowing Russia, the aggressor state, to keep any Ukrainian land it had seized. Trump also wants 50% of Ukraine's rare earth minerals.

However, Ukraine President Volodymyr Zelenskyy has responded by saying that a draft deal presented in Kyiv last week by US treasury secretary, Scott Bessent did not contain adequate post-conflict security provisions.

UK Prime Minister Keir Starmer said he would be prepared to send UK troops to Ukraine to help maintain peace once any deal with Russia was finally struck. Trump last week said US forces would not undertake any peacekeeping duties and many European leaders now fear an emboldened Russia would take the opportunity to attack neighbouring states.

"Investors are keeping a close eye on US-led peace talks for the Ukraine war, especially since EU and Ukrainian officials were excluded from the discussions. On top of that, President Trump's threat to impose tariffs on European car imports starting April 2 is adding to the uncertainty, leaving traders cautious about the broader market outlook," said Hargreaves Lansdown analyst Matt Britzman.

Shared in arms makers were sharply higher on the back of demands by Trump that NATO members ramp up military spending. Rheinmetall, Saab, BAE, Leonardo, Dassault, Qinetiq and Thales were all beneficiaries of geopolitical tensions.

Bank stocks were also higher on rising bond yields.

Reporting by Frank Prenesti for Sharecast.com