Defense stocks power European markets to latest record closing high; Saab soars 16%

European stocks closed higher on Monday as a number of defense stocks soared.

The pan-European Stoxx 600 ended the session with a 0.54% gain, bouncing back from a slight decline Friday to mark another all-time closing high of 555.42 points. Last week saw the regional index close at successive new records.

The index was lifted by a 4.2% uptick in the Stoxx 600 Aerospace and Defense index, as European leaders came together to discuss regional defense efforts and appearing willing to pledge more spending for the sector.

Germany’s Renk Group and Rheinmetall were 17.5% and 14% higher respectively, as Swedish defense manufacturer Saab gained more than 16%. Meanwhile, the U.K.’s BAE System rose 9%, it’s best day since July 3, 2022, according to FactSet data.

Geopolitical tensions between the U.S. and Europe are likely to remain in focus for European markets this week as U.S. officials prepare for talks with Russia to end the war in Ukraine, with officials in Kyiv and Europe being left out of the discussions.

European leaders held an emergency summit in Paris on Monday to discuss how to respond to U.S. President Donald Trump’s apparent decision to sideline Europe, and how to guarantee Ukraine’s country’s security in the future.

Over the weekend, global officials met in Germany for the Munich Security Conference, where European defense spending was in focus. EU Commission President Ursula von der Leyen said at the event that Brussels would float exempting defense spending from the bloc’s fiscal rules, while NATO chief Mark Rutte said the military alliance planned to discuss increasing spending targets at a summit in June.