Europe shares lower as defence and industrial stocks weigh

The pan-European STOXX 600 was 0.2% lower to 575.27 points at close, after logging its fifth straight month of gains in November

European shares closed lower on Monday, with defence and Airbus-led industrial stocks weighing heavily on the main index, starting the new month on a cautious note following November’s gains.

The pan-European STOXX 600 was 0.2% lower to 575.27 points at close, after logging its fifth straight month of gains in November. Most major regional bourses were also down.

In the STOXX 600, the industrial sector was the biggest drag, dropping 1.2%, weighed down by a 5.7% drop in Airbus shares – their worst single-day decline since April 7.

The planemaker said it discovered an industrial quality issue affecting metal panels of a “limited” number of A320-family aircraft. The statement followed a weekend recall of its jets.

Thales, which manufactures the flight computers for the affected aircraft, slipped 2.2%.

Defence stocks dipped 3.2% as investors continued to move away from the sector amid progress toward a deal to end the conflict in Ukraine.

German arms makers Rheinmetall, Hensoldt and Renk dropped between 2.2% and 4.7% to weigh heavily on the STOXX 600. The stocks pulled down Germany’s benchmark DAX by 1%.

It’s maybe a little bit less about prospects for Russia-Ukraine, which remain very uncertain, and maybe a little bit more about investors looking at sectors that have done well for the year and perhaps taking some profits, said Richard Flax, chief investment officer at Moneyfarm.

Investors looked to book some profits on Monday in the absence of new catalysts, while assessing new U.S. data releases and holiday spending trends after Black Friday and Cyber Monday.

They also braced for a speech from U.S. central bank Chair Jerome Powell, due later in the day, for possible hints about the central bank’s policy decision this month.