European stocks rise on defence spending pledge, and other finance news to know

European stocks climbed on 3 March, with the STOXX 600 up 1% on the day and defence shares leading the way. The aerospace and defence index rose 6.5% following European leaders’ commitment to increased defence spending at a Ukraine peace summit hosted by UK Prime Minister Keir Starmer.

The German blue-chip index also gained 0.9%, bolstered by reports of a potential defence fund. Meanwhile, the euro rose almost 1% to $1.047, having fallen as much as 0.4% at one point on 28 February after US-Ukraine talks faltered.

The increase follows a decline in European stocks on Thursday, with carmakers leading the losses after the Trump administration warned of imposing 25% tariffs on EU goods.

Focus now shifts to the European Central Bank’s upcoming meeting—where a further rate cut is predicted—and ongoing global trade tensions after US tariffs against Canada, Mexico and China went into effect on 4 March.

Leaders of Canada’s biggest banks have called for policy reforms as trade risks weigh on the economy.

The banks are urging the federal government to remove internal trade barriers, assess tax policies and reduce regulatory burdens as economic uncertainty grows due to looming US tariffs, Reuters reports.

While the six major banks reported stronger-than-expected first-quarter profits, they warned that trade risks and tariff threats could hinder growth.

TD Bank CEO Raymond Chun told analysts that "this is the chance for Canada to make structural improvements to the country's economic productivity and competitiveness."

Bitcoin surged over the weekend after President Trump announced the creation of a US "strategic crypto reserve", shifting from his earlier “bitcoin stockpile” plan. The reserve will include Bitcoin, Ether, XRP, Solana’s SOL and Cardano’s ADA, CNBC reports. However, the rally was short lived, according to Bloomberg.

One of the UK’s largest pension funds, The People’s Pension, has withdrawn £28 billion from State Street, marking a significant move against the retreat from ESG among major US asset managers.

Mainland Chinese investors have driven a rally in Hong Kong's stock market, pushing the benchmark index to its highest level since 2022. Optimism around China’s tech sector, particularly AI startup DeepSeek, has fuelled a 15% market rise this year and narrowed the gap between A-shares and H-shares.

The European Commission has given automakers an additional three years to meet new CO2 emission targets, now due by 2028 instead of 2025. The move aims to help companies avoid fines while pushing toward the goal of zero emissions by 2035.

The gap between UK house and flat prices has reached a 30-year high, with houses now 1.7 times more expensive than flats. House prices rose 2.2% in the past year, while flat prices grew by just 0.5%, says Zoopla.

Marieke Blom, Chief Economist at ING Group, notes a rising optimism among business leaders, despite concerns over the global outlook. Blom explains that while economists focus on macro risks and long-term effects, business leaders concentrate on more immediate, manageable impacts of trade wars and how both perspectives are equally important.

Experts say tighter capital markets integration could better deploy Europe’s €37 trillion in household savings, fuelling economic growth and innovation. Leaders warn that without it, Europe risks falling behind in key technologies like AI. Read more here.

After a record year of elections, learn more about the possible impact of this on the global economy from this Davos panel on financial fragmentation: