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Shares in European Defense Companies hit the high level on Monday, as investors bet that governments will have to keep the continent’s burden on the security of the continent by increasing military spending.
Rheinmetall had grown 6 percent in Frankfurt, Bae systems increased 5 percent in London and Thales climbed 3.8 percent to Paris. The Stoxx Europe Space and Defense Index hit its highest level at least in the early 1990s.
The widespread sector dance comes as European leaders gather in Paris to work on how to respond to US President Donald Trump’s decision to begin talks with Vladimir Putin, Russia to end the war in Ukraine.
Defense actions were growing from the perspective of European countries that played a role in a security solution for Ukraine, analysts said as part of a widespread increase in the region’s protection costs.
It has been a “big days” for European geopolitics and “we will probably see them as a great catalyst for the highest European defense spending,” said Jim Reid, a strategist at Deutsche Bank.
“Now there is a lot of urgency to increase defense costs and this is something that European leaders seem to be uniting,” he added.
Since returning to the White House last month, Trump has attracted pressure on European allies to increase their protection costs beyond a 2 percent NATO target of GDP, navigating 5 percent as a target of re – which currently only Poland is close to reach.
Older politicians across Europe in recent days have been committed to spending more on protection. UK Prime Minister Sir Keir Starmer has offered to place British troops on the ground and has committed to defining a “way” for the country’s protection expenses to reach 2.5 percent of GDP.
Speaking to Reuters on Friday, Rheinmetall’s chief executive Arin Papperger said the company would grow more than expected.
In an interview with Financial Times this month, Papperger said: “You need to be able to play in the same championship as US weapons companies.. To meet high demand in Europe, we need weapons production in An industrial scale – this is also what politicians are looking for. “
Until the full -scale occupation of Russia in Ukraine almost three years ago, some investors had been careful to support the defense sector due to ethical concerns.
The yields of government bonds increased as investors moved to price to cheaper protection costs. The yield of the 10-year German bond increased 0.07 percentage points to 2.49 percent after the price of debt fell.
Ten -year gilding yields increased 0.05 percentage points to 4.56 percent.
“In terms of market implications, the highest protection costs must lead to increased pressure at European levels,” Jefferies’ Kumar said.
“Whatever the peace process goes, it is clear that Europe will have to increase” expenses for its protection, he added.
