European stocks start the week cautiously amid geopolitical tensions

European stocks saw gains on Monday, with defense shares leading the charge, as investors weighed the broader implications of escalating tensions in the Middle East. Optimism surrounding potential interest rate cuts also contributed to the improved market sentiment.

The European STOXX 600 index edged up by 0.1 percent, with the defense sector index registering a notable increase of 0.6 percent by 0713 GMT. This surge came in the wake of Iran’s deployment of explosive drones and missiles towards Israel over the weekend, prompted by a suspected Israeli attack on its consulate in Syria on April 1.

Among the top performers was Swiss software company Temenos, surging by 15.6 percent after announcing that a board-formed “special committee” concluded the accusations in a Hindenburg Research report were incorrect and misleading.

Ajays shares also saw a rise of 3.6 percent following French bank BNP Paribas’ announcement of an agreement with the Chinese Fosun Group to acquire its nine percent stake in the Belgian insurance company for approximately 730 million euros ($777.60 million).

Furthermore, Adidas (ETR:ADSGN) stocks climbed by 3.5 percent after Morgan Stanley (NYSE:MS) upgraded the German sportswear giant’s rating from “underweight” to “overweight.”