European markets set to start the last trading week of 2025 in flat territory

• Defense stocks underperformed with the aerospace and defense index down 1.53%, despite analysts predicting continued European defense investment acceleration regardless of peace outcomes
• Gold surged above $80 an ounce for the first time before retreating to $71.55, while oil prices jumped over 2% with Brent at $61.89 and WTI at $58.04
• Trump and Zelenskyy reported progress on peace talks with agreement on '90-95%' of a 20-point plan, though major differences remain on territorial concessions and security guarantees

European markets ended mixed Monday, with the pan-European Stoxx 600 index closing up 0.11% at 589.35 points after hitting an intraday record high of 589.61. The UK's FTSE 100 fell 0.04%, while France's CAC 40 and Germany's DAX rose 0.10%. Italy's FTSE MIB declined 0.38%.

Defense stocks were the day's biggest losers, with the Stoxx Europe aerospace and defense index dropping 1.53%. Individual defense names saw significant declines: Leonardo fell 1.96%, while Rheinmetall, BAE Systems, Thales, and Saab also closed lower. The weakness followed weekend peace talks between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy.

Despite near-term pressure on defense stocks, Sydbank analyst Jacob Pedersen noted that European defense investments would "accelerate massively over the next years," suggesting any peace deal could ultimately benefit European equities.

In commodities, oil prices rebounded with WTI crude rising 2.3% to $58.04 per barrel and Brent crude gaining 2% to $61.89, recovering from Friday's 2% decline. Precious metals showed mixed performance, with gold climbing above $80 per ounce before retreating to $71.55, while silver dropped 1.6% to $4,355 per ounce and platinum fell 4.2% to $5.59.

Following Sunday's talks in Florida, Zelenskyy reported agreement on approximately 90% of a 20-point peace plan with full consensus on security guarantees for Ukraine. Trump indicated the agreement was "close to 95%" complete, though significant gaps remain regarding Russian territorial demands and Ukrainian security requirements.

Trading volumes are expected to remain light through the holiday week, with markets closing Thursday for New Year's Day.