European Bank Stocks Had an Ace Year But Novo and Puma Lost Out

Surging metals prices and the promise of massive defense spending boosted European stocks in this record-setting year. But it was banks that stole the show, with a powerful rally that analysts are confident will extend into 2026.

Europe’s Stoxx 600 index has gained 16% this year, creating all-time highs and outpacing the S&P 500 in dollar terms along the way. Banks have led the advance, with the group soaring 65% and on track for the sharpest annual increase since 1997, thanks to strong earnings and shareholder payouts.