European stock markets displayed a mixed performance on Monday as investors assessed the latest developments regarding the stalled peace talks between the United States and Iran. The pan-European STOXX 600 index fluctuated around the flatline. Regional indices showed divergent trends: markets in London and Milan advanced, while those in Frankfurt and Paris declined.
French CAC 40 Index (.FCHI): 8,038.95 points, down 73.62 points (-0.91%) Italian FTSE MIB Index (.FTMIB): 49,416.74 points, up 127.20 points (+0.26%) UK FTSE 100 Index (.FTSE): 10,248.09 points, up 15.02 points (+0.15%) German DAX Index (.GDAXI): 24,306.98 points, down 31.65 points (-0.13%) Spanish IBEX 35 Index (.IBEX): 17,908.80 points, up 19.40 points (+0.11%) European STOXX 600 Index (.STOXX): 611.38 points, down 0.76 points (-0.12%)
The Middle East peace negotiations, which had driven market gains last week, have stalled, leading to a pullback in European defense stocks. Shares of German defense giant Rheinmetall fell 3.6%, while tank parts manufacturer Renk dropped 3.2%. Italian defense leader Leonardo declined 4.4%, Germany's Hensoldt plunged 3.4%, and UK aerospace and defense company Babcock International Group slid 3.5%. This reversal stemmed from U.S. President Donald Trump's announcement that Iran's counter-proposal for resolving conflicts in the Middle East was "unacceptable." Iran's semi-official Tasnim News Agency, citing informed sources, reported that negotiators had received Iran's response to the U.S. peace proposal. The Iranian government demands a comprehensive end to hostilities on all fronts and the lifting of sanctions against Iran. However, President Trump stated on his Truth Social platform Sunday evening that he did not accept Iran's response, calling it "completely unacceptable!" Additionally, Israeli Prime Minister Benjamin Netanyahu said on Sunday that the war with Iran "is not over," and that the U.S. and Israel remain committed to curbing Iran's nuclear ambitions. Amid the decline in defense stocks, Russian President Vladimir Putin indicated that the four-year-long Russia-Ukraine conflict could be nearing its conclusion. Speaking after a significantly scaled-back annual Victory Day parade in Moscow, Putin referred to the conflict as a "special military operation" and stated it was "approaching its end." However, the Ukrainian military reported that Russian drone attacks over the weekend constituted a clear violation of a previously agreed two-day ceasefire. Influenced by these developments, oil futures rose and U.S. stock futures declined in overnight trading. Markets are also focusing on President Trump's scheduled visit to China later this week. No major corporate earnings reports or significant economic data were released in Europe on Monday.
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