17th Feb 2025 12:05
(Alliance News) - European blue-chips were higher early on Monday afternoon, with defence stocks shining as geopolitical tensions simmer and as the expectation of military spend increases builds.
The FTSE 100 index rose 15.78 points, 0.2%, at 8,748.24. The FTSE 250 added 18.56 points, 0.1%, at 20,931.57, and the AIM All-Share rose 0.90 of a point, 0.1%, at 726.96.
The Cboe UK 100 was up 0.3% at 877.75, the Cboe UK 250 also fell 0.1% to 18,265.37, and the Cboe Small Companies was down 0.2% at 16,193.08.
In Paris, the CAC 40 was slightly lower. Frankfurt's DAX 40 added 0.8%, once again hitting a record high.
Against the dollar, the pound faded to USD1.2596 on Monday afternoon, from USD1.2612 at the time of the London equities close on Friday. The euro fell to USD1.0480 from USD1.0505. Against the yen, the dollar declined to JPY151.52 from JPY152.06.
"A mixed start to trade in Europe comes amid growing fears that the new US President seems to show little interest in strengthening ties with their transatlantic partners. Talks over an end to the Ukraine-Russia war could take place in Saudi Arabia, but incredibly this could take place without Europe and even Ukraine itself. An interesting strategy considering the US will likely expect Europe to be the central pillars to any post war security arrangement," Scope Markets analyst Joshua Mahony commented.
"With European leaders heading to Paris in a bid to structure their response, there is a fear that the breakdown in military ties between the US and Europe will necessitate a huge ramp-up in defence spending, thus pushing debt and borrowing costs higher once again. With the FTSE 100 being led by BAE Systems, and European bond yields on the rise, concerns over the shifting narrative around Ukraine, Russia, and the US looks provide key drivers of sentiment in Europe this week."
BAE Systems shot up 6.8% in London. In Paris, Thales added 5.8% and Rheinmetall jumped 9.2%.
Defence stocks rose sharply in Europe on Monday on expectations spending will be ramped up to bolster security in the aftermath of any peace deal in Ukraine.
On Friday, EU President Ursula von der Leyen said: "Let there be no room for any doubt. I believe that when it comes to European security, Europe has to do more...We need a surge in European defence spending. Currently the EU27 are spending around 2% of GDP on defence...but we will need to increase that number considerably once again. Because from just below 2% to above 3% will mean hundreds of billions of more investment every year. So, we need a bold approach."
On Saturday, NATO Secretary General Mark Rutte said Nato members will have to boost their defence spending by "considerably more than 3%".
This is still below the 5% of gross domestic product demanded by US President Donald Trump.
UK Prime Minister Keir Starmer on Sunday said he is ready to send troops to Ukraine if it is needed to ensure the security of Britain and Europe.
The UK is playing a leading role in supporting Kyiv in the war against Russia which "also means being ready and willing to contribute to security guarantees to Ukraine by putting our own troops on the ground if necessary," Starmer wrote in the Daily Telegraph.
"I do not say that lightly," Starmer added, saying he felt "very deeply the responsibility that comes with potentially putting British servicemen and women in harm's way".
A barrel of Brent oil fell to USD74.55 early Monday afternoon from USD74.75 at the time of the London equities close on Friday. Gold was quoted at USD2,900.63 an ounce, up from USD2,893.73.
In London, NatWest and Barclays added 3.4% and 3.2%. The lenders clawed back some lost ground after they fell last week despite stronger than expected results. Shares in the duo have roughly doubled over the past year.
Wood Group shares plummeted another 24%, after a 56% slide on Friday. It had announced plans for further cost cuts, and a possible refinancing, as it battles weaker than expected trading and legacy issues on Friday.
The engineering and consulting business now has a market value of just GBP152.3 million. Last August, Dar Al-Handasah Consultants Shair & Partners Holdings decided not to bid for John Wood after making multiple approaches. The final tilt, priced around 230p per share, valued John Wood at GBP1.58 million.
Springfield Properties rose 10%. It announced the "profitable" sale of 2,480 plots of undeveloped land with planning consent across six sites for a sum of GBP64.2 million to housebuilder Barratt Redrow.
"Proceeds from the land sale will be received over four years and will be used to accelerate the removal of the group's outstanding bank debt and to capitalise on the significant growth opportunities emerging in the north of Scotland. In addition, the group and Barratt have entered into non-binding discussions regarding the possible sale of additional future land holdings on a number of other sites," Springfield, a housebuilder in Scotland, said.
Markets in New York will be closed for Washington's Birthday.
By Eric Cunha, Alliance News news editor
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