(Sharecast News) - Shares in weapons makers surged on Monday on the prospect of higher military spending - sending the benchmark Stoxx to a record high - as European leaders discussed boosting defence budgets amid heightened tensions with Moscow and Washington over ending the war in Ukraine.
The pan-European Stoxx 600 index was up 0.76% to hit 561.54 at 1202 GMT with all regional bourses powering ahead.

France's Dassault soared 15% on the sentiment, while Germany's Rheinmetall and Britain's BAE were further lifted by a price targets upgrade from JP Morgan.

Saab, Qinetiq, Leonardo, Thales and Rolls-Royce also made hefty gains.

UK Prime Minister Keir Starmer hosted a summit of European leaders over the weekend in the wake of an extraordinary outburst from US President Donald Trump during a meeting in Washington last Friday with Ukrainian President Volodymyr Zelenskyy on Friday.

Trump erupted in what some commentators described as a staged attack on Zelenskyy over the latter's criticism of Russian leader Vladimir Putin. Since taking office, the US president has pivoted towards Moscow and started initial talks on ending the war on Ukraine at the exclusion of the Ukrainians and Europe.

The US wants Zelenskyy to cede territory taken by Russia during the three-year conflict and a deal on Ukraine's undeveloped mineral resources as compensation for weapons supplied by Washington.

In response European leaders reaffirmed their support for Ukraine, with the UK committing to increasing defence spending as a share of GDP over the coming years at the expense of a hefty cut to the country's aid and development budget.

There were also reports that the parties in talks to form the next German government were proposing special funds for both defence and infrastructure - with the former potentially unlocking €400bn in spending - to get around the country's so-called constitutional "debt brake" which limits borrowing as a share of GDP.

Reporting by Frank Prenesti for Sharecast.com

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