European Shares Slip as Banks Weigh, Defence Stocks Offer Cushion

European stocks fell in early trading on Wednesday, mirroring overnight weakness on Wall Street, as investors remained cautious over the Federal Reserve’s rate outlook.

STOXX 600 and Regional Moves

The pan-European STOXX 600 index slid 0.5% to 552.5 points by 07:14 GMT.

• Most major regional bourses also ticked lower, with Italy leading losses.
• The decline was largely driven by weakness in financials and banks, reflecting broader risk-off sentiment.

Banks and Financials Lead Declines

Banking stocks were among the hardest hit:

• Deutsche Bank (Germany), Barclays (UK), Societe Generale (France), and Sydbank (Denmark) all dropped more than 1% each.
• The financial services subindex dipped 1.1%, underlining pressure across the sector amid heightened uncertainty about interest rates and credit conditions.

Defence Sector Gains on Geopolitical Comments

On the upside, defence-related stocks advanced 0.8%. The sector found support after U.S. President Donald Trump expressed confidence that Ukraine could retake occupied territory from Russia, urging Kyiv to act swiftly. The comments reinforced expectations of continued defence spending and support for related firms.

Wall Street Influence and Stock Movers

The negative tone was imported from the U.S., where major indexes closed lower overnight following Fed Chair Jerome Powell’s remarks, which offered little clarity on the trajectory of rate cuts.

Among individual movers:

• Lanxess (Germany) tumbled 5.2% after Deutsche Bank downgraded the specialty chemicals maker from “buy” to “hold.”