European shares start 2026 by hitting a record high

European shares hit a record high on Friday in the first trading session of 2026, after capping the previous year with stellar gains, as defence shares led the advances.

By 0820 GMT, the pan-European STOXX 600 index rose 0.4% as investors returned from New Year celebrations.

The benchmark index is on track for its third consecutive weekly advance.

The index finished 2025 with its best showing since 2021 on the back of falling interest rates, Germany’s fiscal boost, and a rotation out of lofty US tech names.

The shares weathered a year of tariff wars, recovering from annual lows in April when global markets wobbled as US President Donald Trump put blanket tariffs on trading partners. Bourses across the region were mostly higher on Friday while trading volumes still remained thin.

The market in Switzerland was closed on the day and will resume trading from next week.

Within the STOXX 600, defence stocks led the gains by rising 1.9%.

Heavy-weight banking shares also provided support, up 0.2%. Basic resources shares were up 1.3%, while the energy index advanced 1%.

On the flip side, consumer-related shares were down 0.2%.

A reading of euro zone PMI data is due at 0900 GMT, which could provide fresh insights into the region’s economic health.