European shares rose to record levels amid Ukraine talks

European shares rose to record levels on Monday, led by defence stocks, as the region’s political leaders called for an emergency summit on the Ukraine war amid growing US calls to boost military spending for security.

Dublin

Euronext Dublin was up 0.8 per cent at close of business, but shares in Bank of Ireland closed lower following a landmark court ruling in Britain.

The UK’s Supreme Court refused to let the Treasury intervene in a case over controversial car loans, dealing a blow to chancellor Rachel Reeves who had sought to argue that the suit was hindering Britain’s regulatory environment.

The case, and a related regulatory inquiry into the matter, weighed on shares of UK banks as investors fear lenders could face costly compensation bills for consumers impacted by the practices.

READ SOME MORE

A mid-career life change: How I left my salaried job and struck out on my own

Irish entrepreneur aims to disrupt painkiller market and build multibillion-dollar business

Aircoach loses its airport advantage

Remote working is here to stay and has whole new language about ‘hidden hybrid’ and ‘mouse jiggling’

Analysts at Bank of United States have estimated the industry could face as much as £38 billion (€45.8 billion) in costs tied to the saga. Bank of Ireland finished down 0.6 per cent, with a trader noting it has “some exposure” to the case. AIB, meanwhile, climbed 0.8 per cent.

Elsewhere, housebuilder Glenveagh Properties finished the day up 1.5 per cent as it made up some of the ground lost following a weak close on Friday. Cairn Homes, meanwhile, was down 0.4 per cent at the end of trading.

London

Britain’s benchmark index closed higher, supported by aerospace and defence stocks, while some banks slid.

The blue-chip FTSE 100 closed 0.4 per cent higher, while the more domestically focused midcap FTSE 250 edged up 0.1 per cent.

Defence company BAE Systems jumped nearly 9 per cent to the top of the blue-chip index, riding the coattails of rising defence stocks across Europe.

The UK’s aerospace and defence index led sectoral gains, rising 4.5 per cent as British prime minister Keir Starmer said his country’s national security was facing a generational challenge and that it was crucial for all of Europe to spend more on defence.

Lenders Close Brothers fell 8 per cent and Lloyds declined 1.9 per cent however after the UK Supreme Court rejected finance minister Rachel Reeves' attempt to intervene in the car loan case. The two are among a number of lenders with motor finance businesses.

Assura jumped 9 per cent after the British healthcare property developer rejected a £1.56 billion proposal from KKR and pension fund Universities Superannuation Scheme.

Engineering firm John Wood Group fell 10.8 per cent to a record low after it forecast a negative cash flow for another year in the previous session.

Europe

The pan-European Stoxx 600 index rose 0.4 per cent, as a gauge of defence and aerospace stocks surged almost 4 per cent to lifetime peaks, having already more than doubled in value since Russia invaded Ukraine three years ago.

Investors expect earnings in the industry to continue to rise strongly, driven by a significant surge in defence budgets to meet new security needs – which analysts have dubbed a “supercycle” for the sector.

Konstantin Oldenburger, a market analyst for CMC Markets, said: “While the US intends to negotiate a resolution to the war exclusively with Russia and Ukraine, it appears they will leave potential peacekeeping responsibilities to the Europeans, who will need to significantly boost their defence budgets to do so.

“The notion that the Americans wish to wind down military support for the region has not been new, especially since Trump’s election victory.”

Banks were also in demand, up 1.2 per cent and flying to 17-year highs, helped by a rise in bond yields.

In Frankfurt, the Dax was up 1.26 per cent to hit a new record high, with the share price of Germans weapons-maker Rheinmetall surging more than a 10th. In Paris, the Cac 40 index rose 0.13 per cent.