- STOXX 600 nears 600-point milestone
- FTSE 100 hits 10,000 points for first time
- Orsted up after challenging US halt on offshore wind project
- Euro zone factory activity contracts in December
Jan 2 (Reuters) - European stocks kicked off 2026 by scaling record highs on Friday, extending 2025's standout rally as tech and defence shares powered the gains.
The pan-European STOXX 600 rose 0.7% to 596.14, just four points away from the closely watched 600-mark, as traders returned from New Year celebrations. The index also notched its third straight weekly advance.
The benchmark wrapped up 2025 with its strongest performance since 2021, buoyed by falling interest rates, German fiscal stimulus and a rotation away from high-flying U.S. tech stocks with stretched valuations.
It was a year that tested investors, too. Markets absorbed tariff shocks and rebounded from April's lows after U.S. President Donald Trump announced blanket tariffs on trading partners, rattling global risk appetite.
FTSE PASSES 10,000 POINTS
On Friday, London's blue-chip FTSE 100 index hit the symbolic 10,000-point marker for the first time.
"From a logical point of view, a milestone of 10,000 is not important, but psychologically it is, as what we are seeing is that investors are keen to put money into the market without the fear of record highs," said Nick Saunders, CEO of trading platform Webull UK.
Bourses across the region ended the week higher. The German index ticked up 0.2%, France's CAC 40 added 0.6%, while the FTSE 100 rose 0.2%.
Within the STOXX 600, ASML jumped 7%, driving gains in peers and the technology sub-sector. Defence stocks gained the most, advancing 3.3%.
Basic resources shares were up 0.6%, while the energy index rose 1.4%, tracking strength in precious metals and crude prices on the day.
"Europe has mostly held on to its gains. There's not a lot of individual news, but in general, it tells us the momentum and positivity towards European shares continue and that's a good sign. It's certainly much better to start the year," said Steve Sosnick, Chief Market Analyst, Interactive Brokers.
Among the laggards, media stocks dipped the most, falling 1.2%, continuing last year's underperformance.
Real estate shares dropped 0.7%.
In other moves, shares of Orsted rose 4.6% after the Danish offshore wind developer said it was challenging the U.S. government's suspension of its $5 billion Revolution Wind project lease.
On the data front, euro zone factory activity retreated further into contraction territory in December as production decreased for the first time in 10 months.
Reporting by Ragini Mathur, Utkarsh Tushar Hathi and Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala, Ronojoy Mazumdar and Alex Richardson
Source: Reuters