Defense stocks plummeted on Wednesday after a report that Germany will abandon plans to build six warships, fuelling investor fears that the boost to defense contractors from increased government spending may not fully materialize.
Berlin is planning to scrap a multi-billion-euro project to build the F126 frigates, according to the Financial Times, citing two people familiar with the matter. It would have been the biggest warship commission since the second world war.
German munition maker Rheinmetall, a big beneficiary of German government contracts, fell as much as 13% in morning trading. Other German-listed stocks Hensoldt and Renk fell 5% and 3.8%, respectively. Sweden’s Saab traded 3.1% lower, Italy’s Leonardo was down 3.7%, and the British giant BAE Systems fell 1.6%.
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