European Shares Edge Higher on Defence Stock Gains Amid Trade and Tariff Turmoil

European shares closed slightly higher on Monday, driven by a boost in defence stocks and promising data from Novo Nordisk's weight-loss drug, Wegovy. The pan-European STOXX 600 index increased by 0.17% to hit 551.07, with the aerospace and defence sector leading the charge, surging 2.1% close to a record peak.

Companies such as Rolls-Royce Holdings, Rheinmetall, and Hensoldt saw increases ranging from 2.8% to 4.5%, fueled by reports that the European Union is developing plans to dispatch troops to Ukraine. Additionally, Norway's decision to purchase new frigates from the UK boosted Britain's BAE Systems by 1.8%.

Meanwhile, rising long-term euro zone bond yields capped overall gains, raising concerns about global government debt levels. U.S. trade policy also occupied the spotlight, as the U.S. seeks Supreme Court involvement to maintain tariffs deemed illegal, with the EU negotiating trade deals amid this uncertainty.