European defence stocks surged as the continent's political leaders gathered for an emergency summit with the US ramping up calls for a boost in military spending, writes Calum Muirhead.
UK Prime Minister Keir Starmer yesterday said he would be "ready and willing" to deploy British troops on the ground in Ukraine to enforce any peace deal with Russia.
The Prime Minister's comments came after Mark Rutte, secretary general of the Nato military alliance, said member countries would need to spend "considerably more" on their armed forces following pressure from US President Donald Trump.
The prospect of higher European demand for everything from weapons and ammunition to fighter jets, tanks and warships sent British defence giant BAE Systems surging 9pc, or 110p, to 1338p, making it the biggest riser in the FTSE 100 in London.
Jet engine maker Rolls-Royce rose 1.7pc, or 10.8p, to a record high of 635.4p while mid-cap defence tech group Chemring surged 10.3pc, or 32.5p, to 347.5p and rival QinetiQ climbed 6.4pc, or 23.6p, to 392p.
BAE has been one of the biggest winners from Russia's invasion of Ukraine. Its stock price has more than doubled since Vladimir Putin's tanks rolled across the border three years ago.
In Europe, German arms manufacturer Rheinmetall hit a record high after gaining 14pc.
Sweden's Saab shot up 16.2pc, Italian aerospace firm Leonardo jumped 8.1pc and French group Thales added 7.8pc.
Trump has demanded other Nato countries spend 5pc of their gross domestic product (GDP) on defence, a massive increase on the previous 2pc target agreed more than a decade ago.
While such an increase is considered unlikely, Rutte said Nato members would need to raise spending to "considerably more than 3pc" of GDP.
Signs of a shift in European capitals appeared to already be under way yesterday as reports emerged that the Danish government was considering upping defence spending to 3pc of GDP.
Prime minister Mette Frederiksen said the continent must "increase military support for Ukraine, produce more, and do it faster".
Polish prime minister Donald Tusk, meanwhile, said that if Europe did not ramp up defence spending now, the continent would need to "spend ten times more" in future.
He said Poland would continue its current rate of defence spending, which sits at 5pc of GDP.
European officials have been spooked by peace talks between the US and Russia, which are due to take place in Saudi Arabia later today, effectively cutting continental leaders and Ukraine itself out of the process.
French president Emmanuel Macron called an emergency gathering of European leaders in Paris yesterday in response to the growing crisis.
Starmer and Macron are among those backing the creation of a European peace-keeping force in Ukraine to enforce any ceasefire and stave off the threat of a future Russian invasion.
It comes ahead of a meeting between Starmer and Trump in the coming days.
