European Shares Surge Amid Banking Stock Rally and Ceasefire Hopes

European shares enjoyed their largest weekly gain in twelve weeks, largely due to robust performances from banking stocks. The pan-European STOXX 600 index gained 0.2% on Friday, culminating in a 2.2% rise over the week. Investors are closely monitoring geopolitical signals of a potential Russia-Ukraine ceasefire.

The euro zone banking index emerged as the best-performing sector year-to-date, showing a 56.8% gain. Analysts attribute this growth to strong earnings and a shift towards domestically-focused equities amid U.S. tariff uncertainties. BofA Global Research strategists highlighted financials as the main contributor to a 5% uplift in market consensus estimates.

On the global stage, defense stocks saw a slight dip amid ongoing geopolitical developments. Meanwhile, in Germany, shares of Munich Re fell by 7.2%, affecting the insurance sector, while Thyssenkrupp's shares rose due to a proposed defense division spin-off. European market recovery aligns with strong corporate earnings and optimism around U.S. Fed rate cuts.

(With inputs from agencies.)