European defense shares declined for a second consecutive session on Monday, pressured by growing momentum in peace talks between the United States and Ukraine aimed at ending the conflict with Russia.
An index tracking the region’s defense and aerospace firms dipped to its weakest level since late August, extending Friday’s sharp 3.4% slide. The two-day drop has now pushed the index to its heaviest weekly loss since March.
Several major names in the sector were under pressure. In Germany, Rheinmetall (TG:RHM), Renk (TG:R3NK) and Hensoldt (TG:HAG) all traded lower. Losses also extended across Europe, with Italy’s Leonardo (BIT:LDO), France’s Thales (EU:HO), and Sweden’s Saab (BIT:1SAAB) slipping in early action.
The broader mood in European equities was more upbeat, however. By 05:21 ET (10:21 GMT), the pan-European Stoxx 600 inched 0.2% higher.
The weakness in defense stocks follows weekend developments in Washington and Kyiv. Both governments said Sunday they would revise an earlier peace proposal introduced by U.S. President Donald Trump, a plan widely criticized for being overly favorable to Moscow.
Trump had previously pushed for Ukraine to accept the proposal by Thanksgiving, though Secretary of State Marco Rubio later indicated the timeline was flexible. In a joint statement released Sunday, U.S. and Ukrainian representatives described their talks as “highly productive,” offering no further details.
Rubio also noted that the list of objections to Trump’s 28-point plan—which calls for Ukraine to surrender territory to Russia and agree not to pursue NATO membership—had been narrowed down. Ukrainian officials, seeking to ease tensions, issued public expressions of gratitude toward Trump after he accused Kyiv of being insufficiently appreciative of American support.
At the same time, European allies—long involved in backing Ukraine—entered the negotiations with their own revised proposal. Their version removes territorial concessions and challenges any constraints on the future size of Ukraine’s armed forces, signaling a tougher stance as the peace process evolves.
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