European shares surge to record highs amid peace hopes in Ukraine

European stocks surged to new record highs on Tuesday as investors were encouraged by the prospect of rising military spending and potential peace talks between the United States and Russia.

The pan-European STOXX 600 index reached an all-time high of 556.81 points, with defence and aerospace stocks leading the charge. This rally comes as the European Union signals an increase in support for Ukraine, while the United States and Russia head into discussions aimed at easing tensions.

At the same time, investors are moving more cash into European markets, looking to avoid the inflationary pressures from trade tariffs in the United States. Gold prices also saw a bump, reflecting investors' caution amidst global economic uncertainties.

According to analysts, Europe's more industrial-focused stock markets are looking increasingly attractive compared to overvalued tech stocks in the United States. For now, it remains to be seen whether this positive momentum can continue as negotiations unfold.