Early market roundup: European stocks boosted by defence; easyJet up

Blue chip stock indices in London, Paris and Frankfurt were higher on Monday morning amid a boost from defence stocks before this week's Nato summit in Ankara.

The FTSE 100 index opened up 45.52 points, 0.4%, at 10,724.93. The FTSE 250 was up 94.02 points, 0.4%, at 23,634.16, and the AIM all-share was up 2.83 points, 0.4%, at 778.92.

The Cboe UK 100 was up 0.5% at 1,064.39, the Cboe UK 250 was up 0.4% at 20,356.61, and the Cboe small companies was down 0.1% at 18,396.36.

US President Donald Trump held separate calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky ahead of this week's Nato summit in Ankara.

According to the Kremlin, Trump and Putin discussed prospects for a settlement in Ukraine during an 85-minute call, as well as Iran and the wider Middle East. Kremlin foreign policy aide Yuri Ushakov said the upcoming Nato summit in Turkey also featured in the conversation.

Meanwhile, Kyiv rejected Moscow's claim that Russian forces had captured the strategic eastern city of Kostyantynivka. A Ukrainian military spokesperson said the city remained under Kyiv's control, while President Zelensky dismissed Russia's announcement as "a lie". The competing claims followed Russian accusations that Ukrainian drones had struck St Petersburg.

Renewed focus on the conflict in eastern Europe boosted defence stocks across the continent. On the FTSE 100, BAE Systems and Babcock both rose 2.0%.

In Germany, Rheinmetall gained 2.3%, while Milan-listed Leonardo jumped 4.6%, also supported by news that Leonardo and Edgewing had secured a £4.6 billion contract for the GCAP programme.

The pound was quoted at USD1.3345 early Monday, lower than USD1.3351 at the London equities close on Friday. Against the euro, sterling edged up to EUR1.1676 from EUR1.1672. The euro traded at USD1.1426, down from USD1.1440, while the dollar rose to JPY162.17 from JPY161.30.

In Asia on Monday, the Nikkei 225 index in Tokyo closed marginally lower. In China, the Shanghai Composite ended 0.1% lower, while the Hang Seng index in Hong Kong closed up 1.0%. The S&P/ASX 200 in Sydney closed 0.2% lower.

In the US on Friday, financial markets were closed for the Independence Day holiday.

In European equities on Monday, the CAC 40 in Paris rose 0.4%, while the DAX 40 in Frankfurt added 0.2%.

The decline in construction activity in the eurozone accelerated in June albeit construction companies registering a slightly stronger rise in subcontractor rates, data published by S&P Global showed.

The S&P Global eurozone construction purchasing managers' total activity index declined to 42.8 points in June from 43.7 points in May. Falling further from the neutral 50-point mark separating growth from contraction, it indicates the pace of decline in construction activity in the eurozone sped up in June.

Cost pressures remained historically elevated, S&P Global highlighted, while pessimism intensified at the end of the second quarter of 2026.

It noted that Germany was the only monitored economy to see the pace of contraction ease from May, however the fall in activity remained robust overall.

Meanwhile, data coming from Germany provided further support after factory orders rebounded more strongly than expected in May.

According to the Federal Statistical Office, manufacturing orders rose 1.9% month-on-month, beating the FXStreet-cited consensus of 1.2%, helped by an 85% surge in transport equipment orders, including aircraft, ships, trains and military vehicles, following several large contracts.

Excluding large-scale orders, factory orders still rose 1.0% on the month, while annual growth accelerated to 6.2% from 2.1% in April.

Back in London, Aberdeen Group topped the FTSE 100 after Citigroup raised its price target to 280p from 265p and reiterated its 'buy' recommendation.

On the FTSE 250, easyJet jumped 10% after saying it had reached an "agreement in principle" with Castlelake on the key financial terms of a possible recommended takeover at £6.90 per share in cash, including a partial unlisted share alternative. The revised proposal values the airline at more than £5 billion, or USD6.7 billion.

The airline said its board would be minded to recommend an offer on those terms, subject to due diligence and agreement of definitive documentation. The UK Takeover Panel has extended the "put up or shut up" deadline, giving Castlelake until August 3 to announce a firm offer or walk away.

The news had a positive effect on its industry peers, with BA owner IAG up 2.0%, Wizz Air added 0.8%. In Dublin, Ryanair shares rose 2.9%.

The airline says its board would be minded to recommend an offer on those terms, subject to due diligence and agreement of definitive documentation. The UK Takeover Panel has extended the "put up or shut up" deadline, giving Castlelake until August 3 to announce a firm offer or walk away.

At the other end of the index, Close Brothers Group fell 6.0% after RBC cut the stock to 'sector perform' from 'outperform' and reduced its price target to 470p from 625p.

In UK media, ITV rose 0.5% after agreeing to sell its Media & Entertainment business to Sky, a wholly owned subsidiary of Comcast, for total consideration of up to £1.6 billion.

The deal comprises £1.2 billion in cash, Sky's Love Productions business valued at £200 million and up to £200 million in contingent cash linked to 2027 advertising performance.

The long-awaited transaction, expected to complete in the second half of 2027 subject to regulatory approvals, will transform ITV into a pure-play global content business centred on ITV Studios. ITV expects to return around £950 million, equivalent to 25p per share, to shareholders after completion.

ITV Studios will acquire Love Productions, the producer of The Great British Bake Off, and enter into a long-term content supply agreement with ITV Media & Entertainment and Sky that includes a £2.1 billion minimum spend commitment between 2028 and 2032. ITV also expects annual stranded costs of around £25 million, which it said will be broadly offset by Love Productions' profit contribution.

Following Comcast's planned separation, Sky and ITV Media & Entertainment are expected to become part of NBCUniversal once both transactions complete.

Among smaller caps, Goldstone Resources jumped 32% after announcing a £3.5 million subscription by Persistence Gold at 1.0p per share.

Gold was quoted at USD4,166.00 an ounce early Monday, little changed from USD4,167.57 on Friday. Brent oil was quoted at USD71.25 a barrel, slightly lower than USD71.76.

Still to come on Monday's economic calendar, the UK releases new car sales and construction PMI data, while Bank of England Monetary Policy Committee member Catherine Mann is due to speak.

Elsewhere, the eurozone publishes producer price inflation and retail sales figures, while Ireland releases unemployment data.

In North America, attention will turn to the US composite PMI and ISM services PMI, alongside Canada's composite PMI and the Bank of Canada's business outlook survey.

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