The rally was led by German arms manufacturer Rheinmetall, which jumped 14% in Frankfurt, while UK-based BAE Systems soared 16% in London and Italy’s Leonardo climbed 10% in Milan. Rolls Royce was up 5.7%. The stock surge followed reports that Germany ...

The value of European defence stocks has risen by more than £100bn this year as the Continent races to rearm. An index tracking the biggest European munitions firms – including BAE Systems in the UK, Rheinmetall in Germany and Leonardo in Italy – has risen 34 per cent since January.

Shares in BAE Systems, Rheinmetall and Leonardo all added to strong gains this year on Monday amid expectations of rising European defense spending.

Yet leaders who gathered in London on Sunday have a consolation of sorts: the pressure to rapidly rearm gives them cover to hike taxes.

German defence companies seeking more capacity as Europe prepares to raise military spending are eyeing the ailing car industry, the first sign of a shift that could help revive the continent's biggest economy after two years of contraction.

Shares in Germany's Rheinmetall have soared 57% this year, while BAE Systems is up 17% and France's Thales has gained 22%.

Rheinmetall (OTCPK:RNMBF) (OTCPK:RNMBY) on Monday jumped as much as 15% to a record high amid a broader rally in Europe, Middle East and Africa defense stocks as European leaders worked to develop a plan to end the war in Ukraine.

The brighter mood, in equity markets at least, failed to spread to New York. At the time of the London close, the Dow Jones Industrial Average was down 0.5% at the time of the London equities close. The S&P 500 was 0.4% lower and Nasdaq Composite declined 0.7%.

This year’s fierce rally in European defense stocks found new legs Monday after leaders on the continent met over the weekend to forge a peace plan for Ukraine, during

European defense stocks surged on Monday after leaders met with Zelenskyy in London. Ukraine's president left Washington on Friday without a minerals deal after clashing with Trump. Rheinmetall ...

Manufacturers of tanks, radar and weapons are aiming to ramp up production as Europe responds to U.S. pressure to take care of its own defences. Carmakers, for decades Germany's economic powerhouse, are meanwhile cutting jobs and shutting plants amid slowing demand and a creaking electric vehicle transition.