The pan-European STOXX 600 rose 0.91% to close at 568.01. Major regional markets also closed higher, with Germany’s DAX and France’s CAC up 1% and 0.8% respectively.
Prospects of an end to the nearly four-year-old Russia-Ukraine war continued to drive the STOXX 600 index, with European construction and materials stocks extending their rally to 2.4%. Germany’s Heidelberg Materials gained 6.6%, cement maker Buzy 6.1% and rock-wool maker Rockwool 4.5%.
Ukraine on Tuesday signaled its support for the framework of a peace accord with Russia but insisted that sensitive issues needed to be resolved at a meeting between President Volodymyr Zelensky and US President Donald Trump.
European defenses rose 1% after falling more than 5% in the past two sessions on expectations that the war in Ukraine is nearing its end.
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The European Parliament approved a 1.5 billion euro ($1.7 billion) plan to fund defense investments across the EU and support Ukraine, while Britain separately pledged to deliver more air defense missiles to Kiev in the coming weeks.
“The last week has been a back-and-forth with peace-talk news, but it looks like the Russians aren’t going to play ball and the deal may just crumble. It means Europe still needs to spend more on defense than would have been the case anyway,” said Chris Beauchamp, chief market analyst at IG Group.
Meanwhile, global markets assessed a mixed set of delayed US data that kept expectations of a Federal Reserve interest rate cut in December intact.
The odds for a December rate cut were 82.7%, according to CME Group’s FedWatch tool.
The data came after Fed Governor Christopher Waller suggested that continued weakness in labor data could warrant another quarter-point rate cut in December, backing comments from New York Fed President John Williams.
Back in Europe, banks posted a 1.8% jump, mirroring their British counterparts ahead of UK Finance Minister Rachel Reeves’ budget announcement on Wednesday. The Goldman Sachs note cited a Financial Times article that indicated the banking sector would be exempt from the tax hike.
The week’s early gains provided much-needed relief for the STOXX 600 index, which retreated from its mid-November record high after a selloff in global risk assets amid an AI-driven rally and expectations that the Fed could hold off on a December rate cut.
Among the top movers, Dutch bank ABN Amro rose 6.4% after announcing plans to cut 5,200 full-time jobs by 2028 as part of its cost-cutting pledges.
Kingfisher jumped 5.9% after the home improvement retailer upgraded its full-year profit forecast.
In contrast, it tumbled 9.3% as the worst STOXX 600 performer after Basel cut its written premium outlook, citing stiff competition and weak growth in cyber insurance.
Thyssenkrupp Nucera fell 9.3% after reporting a sharp decline in sales in 2026.
A spokesman for the Spanish stock exchange said the stock market was trading normally, but index values were not shown due to a technical error.
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