By Cristina Gallardo

European aerospace and defense groups' stocks fell amid concerns that U.S. tariffs could unleash a global recession and weaken the dollar.

In midday trading in Europe, German arms maker Rheinmetall was down 3%, recovering ground after falling 18% in opening trade, while sensors-provider Hensoldt fell 2.95%.

The losses were felt across the region. The U.K.'s Rolls-Royce and Babcock International were down 5.4% and 5.5%, respectively. Meanwhile, France's Thales fell 2.6%, Italy's Leonardo declined 3.4%, Spain's Indra Sistemas fell 4.15% and Sweden's Saab lost 1.4%. Britain's BAE Systems was spared from the worst, falling nearly 1%.

Russ Mould, investment director at AJ Bell, said some of these stocks were on their knees in morning trade, as investors worried about the impact of the U.S. tariffs on the global economy and companies' earnings.

However, none of these companies have yet lost all of their year-to-date gains, which were strong in previous months due to expectations of higher military spending across Europe.

Meanwhile, France's Dassault Aviation lost 5%, engine manufacturer Safran 7%, and Airbus declined 6.6%, as higher U.S. tariffs have led to the depreciation of the U.S. dollar, significantly impacting future profitability of the European aerospace companies, Barclays said in a note.

This is because aircraft are sold exclusively in U.S. dollars but are manufactured with costs in dollars, euros, and pounds, they added.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

April 07, 2025 06:45 ET (10:45 GMT)

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