European stocks hit another record close as banks, miners lead

EUROPEAN stocks logged a second consecutive record close on Tuesday, lifted by banks and commodity-linked shares, although gains were capped by thin, year-end trading.

The pan-European Stoxx 600 rose 0.6 per cent to 592.78, edging ever closer to the 600 points milestone.

Banks jumped 1.3 per cent, while aerospace and defence gained 1.4 per cent.

The defence index has scored a run of record highs this year and, despite easing back since October, is still on course for its biggest annual gain since 1996, buoyed by pledges of higher defence spending across Europe.

Basic resources led the Stoxx 600 higher, up 1.7 per cent, as silver and gold steadied after a sharp retreat from record highs.

Energy added 0.7 per cent. Oil prices climbed more than 2 per cent in the prior session after Russia accused Ukraine of attacking President Vladimir Putin’s residence, while investors looked for clearer signals on Ukraine peace talks.

All Stoxx 600 sub-indexes were in the green, with Technology rising 0.7 per cent.

Moves across major regional markets were higher, with the benchmark index in London up 0.7 per cent and Germany’s up 0.6 per cent.

As 2025 draws to a close, the index is on track for its strongest annual performance since 2021, bolstered by a combination of declining interest rates, Germany’s commitment to fiscal expansion, and investors diversifying away from premium-valued US technology stocks.

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“Investors have been looking beyond the usual suspects for value and diversification ... and the world continued to be beset with geopolitical turmoil and fears of an AI bubble,” said Danni Hewson, head of financial analysis at AJ Bell.

Many European exchanges will be shut on Wednesday, while others, including London and Paris, will run shortened sessions ahead of the New Year holiday.

With the week compressed by holidays, trading is expected to stay light. Sparse corporate updates and a thin calendar of catalysts leave investors leaning more heavily than usual on the US Federal Reserve’s December meeting minutes, due later in the day.

“The current market mood is very strong and positive for European equities, and we expect more of the same strong performance in 2026, particularly for defence stocks and European banks,” said Kathleen Brooks, research director at XTB.

Among individual stocks, Fresnillo climbed 6.8 per cent, topping the benchmark index after Citi analysts raised their target price for the stock while maintaining a buy rating.

Airbus rose 1.5 per cent after Air China signed an agreement with the planemaker to purchase 60 A320NEO jets in a deal worth around US$9.5 billion at list prices. REUTERS