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Pan European stock index breaks all-time high

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Crude rises after reports of Opec+ delays to supply

increase

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Investors wary of Russia-Ukraine talks, tariff news

By Nell Mackenzie

LONDON, Feb 17 (Reuters) - European shares rose to

record levels on Monday, led by defence stocks, as the region's

top political leaders called for an emergency summit on the

Ukraine war amid growing U.S. calls to boost military spending

for security.

The pan-European STOXX 600 index jumped as high as

0.4%, as a gauge of defence and aerospace stocks

surged over 3% to lifetime peaks, having already more than

doubled in value since Russia invaded Ukraine three years ago.

Investors expect earnings in the industry to continue to

rise strongly, driven by a significant surge in defence budgets

to meet new security needs - which analysts have dubbed a

"supercycle" for the sector.

"A resolution to the conflict in Ukraine could deliver

positive growth impulses for Europe, including improved consumer

confidence, lower energy prices, and easier financial

conditions," Bruno Schneller, managing director at Erlen Capital

Management.

Banks were also in demand, up 1.5% and flying to

17-year highs, helped by a rise in bond yields.

French President Emmanuel Macron will on Monday host an

emergency summit on Ukraine after U.S. officials suggested

Europe would have no role in any talks this week in Saudi Arabia

aimed at ending the conflict.

The imminent threat of reciprocal U.S. tariffs has receded

until April, but the risk that they might include levies based

on value added taxes in other countries was a major worry.

"Trade policy remains a wildcard, with the potential for

incremental tariffs and their impact on inflation and growth.

While the announced tariffs have not yet materially altered the

economic landscape, further escalation could introduce new

uncertainties," Schneller added.

The Financial Times reported on Sunday that the European

Commission would explore tough import limits on certain foods

made to different standards in an effort to protect its farmers,

echoing President Donald Trump's reciprocal trade policy.

U.S. markets are shut on Monday for the Presidents Day

holiday, keeping trading volumes lighter than usual.

AI ENTHUSIASM

Goldman Sachs ( GS ) has raised its outlook for Chinese growth and

stocks, arguing that widespread adoption of AI could raise

earnings per share by 2.5% a year over the next decade. It would

also lift the fair value of Chinese equity by 15% to 20% and

attract $200 billion of fund inflows.

Hong Kong equities retreated from recent highs on Monday,

while Chinese stocks ended slightly up as investors started to

pocket gains from a tech-driven rally while digesting news from

President Xi Jinping's meeting with top tech bosses in Asia.

The Hang Seng index closed flat, China's blue-chip

CSI300 index finished up 0.21%.

Tokyo's Nikkei also steadied with little change on

the day after Japan reported surprisingly strong economic growth

of an annualised 2.8% for the fourth quarter. The gains were

limited by a further rise in the yen to 151.65 per

dollar.

South Korean shares added 0.6% and Taiwan's

rallied 1.5%.

DOLLAR NOT SO EXCEPTIONAL

A holiday in U.S. markets made for thin trading, though the

S&P 500 futures and Nasdaq futures rose 0.2%.

S&P 500 ended Friday up 1.5% on the week, while the Nasdaq

gained 2.6%.

The week ahead is filled with key data releases, including

February flash business activity data across the globe while in

Europe, markets also have their eye on German elections this

weekend.

The euro was little changed around $1.05,

while the dollar slipped almost 0.5% tpo 151.63 yen.,

The pound held steady at around $1.2590, just below

its highest level in two months, as investors looked towards

employment and inflation data later in the week.

Central banks in Australia and New Zealand are both expected

to cut interest rates at policy meetings this week.

In commodity markets, gold came off Friday's record highs at

$2,898 an ounce having rallied for seven weeks straight.

Oil producer group OPEC+ is considering pushing back a

series of monthly supply increases due to begin in April despite

calls from U.S. President Donald Trump to lower prices,

Bloomberg News reported on Monday, citing delegates.

Brent rose 27 cents to $75.01 a barrel, while U.S.

crude gained 29 cents to $71.03 per barrel.