FRANKFURT: European shares ended lower on Monday, with defence and Airbus-led industrial stocks weighing heavily on the main index, kicking off the new month on a cautious note following November’s gains.
The pan-European STOXX 600 was 0.2 percent lower to 575.27 points at close, after logging its fifth consecutive month of gains in November. Most major regional bourses were also lower.
In the STOXX 600, the industrial sector was the biggest drag, falling 1.2 percent, weighed down by a 5.7 percent drop in Airbus shares – their worst single-day decline since April 7.
The planemaker said it discovered an industrial quality issue affecting metal panels of a “limited” number of A320-family aircraft. The statement followed a weekend recall of its jets.
Thales, which manufactures the flight computers for the affected aircraft, shed 2.2 percent.
Defence stocks sank 3.2 percent as investors continued to move away from the sector amid progress toward a deal to end the war in Ukraine.
US and Ukrainian officials held “productive” talks on Sunday on a potential Russia-Ukraine peace deal, with US Secretary of State Marco Rubio expressing cautious optimism despite hurdles to ending the almost four-year-old war.
German arms makers Rheinmetall, Hensoldt and Renk declined between 2.2 percent and 4.7 percent to weigh heavily on the STOXX 600. The stocks pulled down Germany’s benchmark DAX by 1 percent.
“It’s maybe a little bit less about prospects for Russia-Ukraine, which remain very uncertain, and maybe a little bit more about investors looking at sectors that have done well for the year and perhaps taking some profits,” said Richard Flax, chief investment officer at Moneyfarm.
Investors looked to book some profits on Monday in the absence of fresh catalysts, while assessing new US data releases and holiday spending trends after Black Friday and Cyber Monday.
They also braced for a closely watched speech from US Federal Reserve Chair Jerome Powell, due later in the day, for possible hints about the central bank’s policy decision this month.
“It is almost certain that the Fed is going to go ahead with that. The question is, what comes next? Are we going to hear a hawkish cut - in which case that may quickly put a stop to the recovery rally we saw last week?” said Fiona Cincotta, senior market analyst at City Index.
Growing confidence in a December US interest rate cut, easing concerns about a potential AI bubble, and progress toward a Russia-Ukraine ceasefire improved global risk sentiment last week, helping to stage a recovery in Europe’s markets as well.
On the flip side, the region-wide Luxury sector outperformed its peers to jump 1.2 percent, with Deutsche Bank seeing the sector well-positioned for accelerating growth throughout 2026.
Among other stocks, London-listed miner Fresnillo jumped 7 percent on elevated expectations of a US rate cut.
British online trading platform Plus500 surged 6.5 percent on being appointed as the clearing partner for CME Group and FanDuel’s new event-based contracts platform.
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