European markets start December in negative territory, as defense sells off

LONDON — European stocks started the last trading month of the year in negative territory.

The Stoxx 600 began Monday in negative territory, with the pan-European benchmark down 0.3% shortly after 8:30 a.m. in London (3:30 a.m. ET) with major bourses and sectors in the red.

Regional markets had closed in positive territory on Friday, at the end of a choppy month for stocks as concerns over lofty AI valuations returned to the fore.

Uncertainty over monetary policy also affected sentiment last month but investors are now expecting the U.S. Federal Reserve to trim interest rates when it meets on Dec. 9-10. Traders are pricing in an 87.4% chance of a quarter-point rate cut, according to the CME FedWatch Tool.

European defense stocks fell sharply on Monday as investors kept a close eye on progress toward a peace deal for Ukraine this week. Rheinmettal slipped 2.4%, while Renk dropped almost 3.8%, and Hensoldt was about 3.2% lower around 8:25 a.m. in London (3:25 a.m. ET).

U.S’ Special Envoy Steve Witkoff travels to Moscow for talks with Russian President Vladimir Putin and other Kremlin officials. The talks come after Ukraine said it approved in principle of a U.S.-backed 19-point peace plan. The plan is an amended version of an initial 28-point plan, devised secretly by the U.S. and Moscow, which appeared to favor Russia.

Ukrainian and U.S. officials, led by U.S. Secretary of State Marco Rubio, held more talks in Florida over the weekend. Rubio said the talks were “very productive” but that there was more work left to be done.

Precious metals miner Fresnillo led European stocks in early trade on Monday, advancing 3.1% as gold reached a six-week high at the start of a new trading month. Other miners notched early gains, with Anglo American positive at 1.3%, and Glencore trading higher at 1.5%.

Gold spot prices were at $4251.22, up 0.48%, on Monday.

Meanwhile, shares in Airbus were down 2.1% after the European aircraft manufacturer moved to rapidly update flight software in its A320 fleet over the weekend. Fears of widespread travel disruption failed to materialize after Airbus said on Friday it was immediately requesting the changes following concerns that solar radiation could potentially corrupt crucial flight control data.

Asia-Pacific markets kicked off December in mixed territory as traders assessed fresh manufacturing data from China, which showed China’s factory activity unexpectedly contracted in November.

Meanwhile, U.S. stock futures were little changed on Sunday night following a winning week, as traders prepared to wrap up a strong 2025.

Seasonality is also on Wall Street’s side. The S&P 500 averages an advance of more than 1% in December, making it the third-best month of the year for the benchmark in records going back to 1950, according to the Stock Trader’s Almanac.

There are no major earnings or data releases in Europe on Monday.

— CNBC’s Fred Imbert contributed reporting to this market report.