Europe close: Stocks manage gains amid fresh global tension
By Josh White
Date: Tuesday 06 Jan 2026
(Sharecast News) - European shares extended their rally on Tuesday, with the benchmark Stoxx 600 pushing further above the 600-point mark as investors continued to assess geopolitical developments and a heavy flow of economic data.
The pan-European index rose 0.58% to 605.28, supported by gains in London and Paris, while moves elsewhere were more muted.
The advance came amid continued strength in commodity-linked and defence stocks, following US military action in Venezuela over the weekend.
In national markets, the FTSE 100 outperformed, climbing 1.18% to a fresh record of 10,122.73.
France's CAC 40 added 0.32% to 8,237.43, while Germany's DAX was little changed, edging up 0.1% to 24,892.20.
Patrick Munnelly, market strategy partner at TickMill, said the UK's blue-chip index had "soared to an all-time high on Tuesday, comfortably staying above the 10,000-point threshold", noting that the milestone was "fuelled by gains in oil and defence stocks, which continued their upward trajectory following US military actions in Venezuela over the weekend".
He added that the FTSE 100's record-breaking performance extended strong momentum from 2025, when it outperformed both Europe's Stoxx 600 and the US S&P 500, driven by commodity-linked sectors and expectations of further monetary policy easing from the Bank of England.
Sentiment was underpinned by strong gains on Wall Street on Monday, when the Dow Jones Industrial Average hit a new record as defence and energy stocks rallied following the US operation that led to the ousting of Venezuelan president Nicolas Maduro.
Munnelly noted that energy and defence shares remained well supported, highlighting that Shell and BP rose, while the aerospace and defence sector gained, with Rolls-Royce and BAE Systems up amid heightened geopolitical tensions.
Eurozone growth cools in December, still ends year strongly
Economic data showed eurozone growth cooled in December but ended 2025 on a strong footing.
The final HCOB composite PMI slipped to 51.5 from November's 30-month high of 52.8, while the services PMI eased to 52.4 from 53.6.
Spain led the bloc, with its composite output index rising to 55.6 from 55.1.
Hamburg Commercial Bank chief economist Cyrus de la Rubia said the eurozone services sector had grown for seven consecutive months and that "the recovery in services gained momentum in the fourth quarter", adding that GDP growth was likely to have accelerated despite manufacturing remaining weaker.
In the UK, inflation and activity data were mixed.
The BRC-NielsenIQ shop price index rose 0.7% year on year in December, up from 0.6%, as food inflation accelerated to 3.3%, while non-food deflation held at -0.6%.
Munnelly said the data pointed to persistent price pressures, noting that "CPI food inflation may rise in December but remain below earlier projections, potentially leaving headline CPI - 3.2% year-on-year - slightly under BoE forecasts ahead of February's MPC meeting".
BRC chief executive Helen Dickinson said shoppers "still found plenty of value across many Christmas essentials", but warned inflation was likely to remain "sticky" in 2026 due to higher policy and regulatory costs.
Meanwhile, the S&P Global UK services PMI edged up only marginally to 51.4 from 51.3, below expectations, with Tim Moore of S&P Global Market Intelligence describing growth as "lacklustre" amid weak economic prospects and rising cost pressures.
Separate data showed UK new car registrations rose 3.5% in 2025 to 2,020,520, topping two million for the first time since the pandemic.
Battery electric vehicle registrations reached 473,348, giving BEVs a 23.4% market share, though still below the government's 28% target.
SMMT chief executive Mike Hawes called the result "reasonably solid" but cautioned that EV adoption remained too slow and costly for industry.
UK supermarket sales also strengthened in December, with take-home grocery sales rising 3.8% to a record £13.8bn, while inflation eased to 4.3%, according to Worldpanel by Numerator.
Russ Mould, investment director at AJ Bell, said the Worldpanel data showed "a slight easing in grocery price inflation, which seems to have encouraged some shoppers to go on a bit of a splurge", adding that sales of premium own-label products topped £1bn for the first time, even as discounters Aldi and Lidl recorded their biggest-ever Christmas market share.
InPost surges on news of unnamed bidder, sportswear names in the red
On the equities front, InPost surged after confirming it had received an indicative takeover approach from an unidentified bidder.
AJ Bell's Dan Coatsworth said the move "looks like an opportunistic bid following a poor year for the share price", adding that while InPost faced challenges, "it is a highly attractive takeover target for someone looking to get ahead in the European parcel delivery market".
Ocado jumped after JPMorgan placed the group on 'positive catalyst watch', while Patrick Munnelly highlighted the Worldpanel data showed strong Christmas-quarter sales growth.
Novo Nordisk shares advanced following the US launch of its Wegovy weight-loss drug, while semiconductor stocks including ASMI and BESI gained on continued AI-driven demand.
On the downside, Adidas and JD Sports fell after Bank of America downgraded the sportswear sector.
Russ Mould said Adidas "slumped 7% after suffering a double downgrade", with the bank citing weaker growth prospects and competition from more modern sporting brands, adding that this "had a negative read-across to JD Sports", which dropped sharply given its exposure to Adidas footwear.
Reporting by Josh White for Sharecast.com.
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