Europe midday: Bank, defence stocks in focus as Stoxx rallies

(Sharecast News) - European shares rallied on Monday, with banks rebounding after concerns about the stability of the US regional banking sector that hit equities in the sector last week, while defence stocks were boosted after US President Donald Trump once again appeared to side with Russia over the war with Ukraine.

The pan-regional Stoxx 600 was up 0.59% to 569.56 at 1200 BST. Germany's DAX was up 1.12%, while France's CAC 40 fell sharply, giving up morning gains to be 0.02% lower.

US lenders Zions and Western Alliance last week revealed exposure to bad loans, sparking a sell-off in bank shares around the world on concerns over stability. However, bank shares bounced back, with Banco Sabadell, BPER Banca, Banco Bilbao, Standard Chartered and HSBC all higher.

Meanwhile, defence stocks all surged after Trump had what was described as a "fractious" meeting with Ukraine leader Volodymyr Zelenskyy in the White House last week, with the Financial Times reporting that it descended into a "shouting match".

Trump reportedly told Zelenskyy to give up large parts of Ukrainian territory already seized by Russia, a u-turn that took place after the US leader had a two-hour phone call with Russian President Vladimir Putin ahead of a planned meeting between the two authoritarians in Hungary.

Defence stocks surged on the prospect of continuing conflict, with Hensoldt, Renk, Thales, Rheinmetall, Leonardo and Saab all making large gains.

In economic news, German producer prices fell 1.7% last month year on year due to lower energy costs, according to official statistics published on Monday.

Prices fell 0.1% compared to August, the federal stats agency added. Energy prices fell 7.3% year-on-year, with natural gas prices down 10.7% annually and electricity prices declining by 10.2%.

Capital goods prices in were up 1.9% year on year and 0.1% compared with August. Machinery was 1.8% more expensive than in September 2024. Motor vehicles, trailers and semi-trailers increased by 1.1% compared with September 2024 and 0.2% on August.

Traders were also assessing news from China, where the economy has slowed to its lowest level in a year, on the back of the trade war with the US.

The economy expanded 4.8% year-on-year in the third quarter, data from the National Bureau of Statistics revealed, slowing from the second quarter's 5.2% and 5.4% growth recorded in January-March.

In other equity news, Kering shares jumped 4% after the luxury group agreed a �4bn deal to sell its beauty business to L'Or�al.

Building materials giant Holcim gained after signing a deal to buy Germany outfit Xella, a maker of walling systems for �1.85bn.

Shares in Thyssenkrupp Marine Systems soared on debut, after Thyssenkrup listed a minority stake at �60 a share, with the stock hitting �87 at one point in Frankfurt. Shares in the parent plunged 18%.

Reporting by Frank Prenesti for Sharecast.com