European stocks end mostly higher, led by defense gains

ISTANBUL

European stocks closed Thursday up, except for France, as investors rushed to defense stocks after NATO announced a decision to increase defense budgets of members to 5% of their gross domestic products (GDP).

The pan-European Stoxx 600 index increased 0.09%, or 0.5 points, to close the day at 537.48.

Germany's DAX 40 index was up 0.64% to end at 23,649.3, and Britain's FTSE 100 rose 0.19% to 8,735.6 points.

Italy's FTSE MIB index added 0.08% to close at 39,351.32 points.

But France's CAC 40 inched down 0.01% to end at 7,557.31.

The mostly positive course was driven by gains in the defense firms. Rheinmetall climbed 7.28%, Saab hiked 6.3%, Leonardo increased 4.28%, BAE Systems rose 3.9%, and Thales was up nearly 3%.

Also, Stoxx 600's Aerospace and Defense index rose 2.85%.

The gains in the defense sector followed NATO countries' decision Wednesday to commit to a significant boost in defense spending, pledging to allocate 5% of annual GDP by 2035 to meet core defense requirements and broader security needs.

It will strengthen deterrence and defense capabilities amid growing security challenges, particularly the "long-term threat" posed by Russia and the persistent danger of terrorism, said NATO.

"Allies commit to invest 5% of GDP annually on core defense requirements as well as defense- and security-related spending by 2035 to ensure our individual and collective obligations, in accordance with Article 3 of the Washington Treaty," it said.

The European Investment Bank announced Thursday that it signed a strategic agreement with Italy to provide €107.5 million ($126 million) in funding to help strengthen that country's defense and security capabilities.

The euro traded at around 1.1728 against the US dollar as of 1715GMT, up 0.6%.