European defense stocks jump 1% as world leaders meet for NATO summit

Defense stocks jump

European defense stocks rallied on Wednesday morning, as world leaders gather in The Hague, Netherlands, for the annual NATO summit.

The military alliance's 32 member states, with the exception of Spain, have reportedly agreed to hike their defense spending target to 5% of gross domestic product.

The regional Stoxx Aerospace and Defense index was last seen around 1.2% higher. Year-to-date, the index has gained close to 50%.

On Wednesday morning, the European defense sector's top movers were British engineering giant Babcock International, up 12%, Italian aerospace firm Avio, which gained 2.5%, and Germany's Renk, up 2%.

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European stocks open higher

It's around 25 minutes since the opening bell, and European stocks are broadly trading in positive territory.

The pan-European Stoxx 600 index was last seen up by around 0.3%, with all major bourses in the green. France's CAC 40 is up by 0.4%, while London's FTSE 100 has gained 0.2% and the German DAX is trading flat.

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Sterling strengthens after hitting 3-year high

The British pound was marginally higher against the U.S. dollar this morning and was last seen trading at around $1.363.

On Tuesday, sterling had hit its highest level versus the greenback since January 2022.

The pound was up by around 0.1% against to trade at 1.173 euros on Wednesday morning.

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Here are the opening calls

Good morning from London, and welcome to CNBC's live blog covering European financial markets action on Wednesday, and the latest regional and global business news, data and earnings.

Futures data from IG suggests a positive start for European markets, with London's FTSE looking set to open unchanged at 8,764, Germany's DAX up 0.2% at 23,699, France's CAC 40 flat at 7,625 and Italy's FTSE MIB also up 0.3% at 39,673.

Global market sentiment rose Tuesday on bets that the ceasefire between Iran and Israel could last, after a shaky start to the truce that saw President Donald Trump lambast both countries for violations.

Traders are also digesting the latest comments from the U.S. Federal Reserve Chair Jerome Powell, who said Tuesday that the central bank was committed to keeping inflation in check, and would likely keep rates steady until there's more clarity on how trade tariffs might affect prices.

Powell said policymakers were “well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”

What to keep an eye on today

European markets will be keeping a close eye on events in the Middle East on Wednesday to see if a fragile ceasefire continues between Israel and Iran.

Meanwhile, the NATO summit in the Netherlands concludes Wednesday, with the alliance's 32 member states expected to issue a formal joint statement on hiking their defense spending target from 2% to 5% by 2035. President Donald Trump joined the summit Tuesday evening.

CNBC's Steve Sedgwick is in The Hague for the gathering and will be speaking to Finnish President Alexander Stubb and German Foreign Minister Johann Wadephul today.

On the data front, French consumer confidence and Spanish gross domestic product figures are due.