European equities moved higher on Monday, adding to gains seen at the start of the year, as investors rotated into defence stocks following U.S. military action in Venezuela that reignited geopolitical tensions.

By 08:10 GMT, the pan-European STOXX 600 index was up 0.3%. Market participation is expected to improve as investors return from the New Year holiday period and trading activity normalises.

Defence shares led sector performance, with the sector index climbing 2.7% to its highest level in two months. Technology stocks and basic resources also posted solid gains, rising 2.1% and 2.0% respectively.

Market attention remains focused on the aftermath of the weekend operation in which U.S. forces captured Venezuelan President Nicolas Maduro. U.S. President Donald Trump said on Saturday that Washington would place Venezuela under temporary American control, adding to uncertainty around the geopolitical outlook.

Beyond geopolitics, investors are closely monitoring central banks, assessing incoming economic data for signals on the timing and pace of potential interest rate cuts.

In the resources sector, mining stocks including Glencore (LSE:GLEN), Rio Tinto (LSE:RIO) and Anglo American (LSE:AAL) advanced, supported by rising copper prices.

Meanwhile, shares in ASML (EU:ASML), the world’s largest supplier of chipmaking equipment, jumped 3.9%. The move followed an upgrade from analysts at Bernstein, who lifted their rating on the stock to “outperform” from “market perform” and raised their price target to €1,300 from €800.

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