FRANKFURT (dpa-AFX) - Clear price gains have put the shares of defense companies back on the road to recovery on Tuesday. The recent weakness seems to have ended for the time being. Until the beginning of April, defense stocks had been particularly strong, driven by the wars in Ukraine and Gaza as well as the tensions between China and Taiwan. But then the air ran out and investors preferred to take profits for the time being.

The general market weakness in the first half of June did not spare defense stocks either. Following the shift to the right in the European elections, uncertainty surrounding further political developments in France in light of the new elections called by President Emmanuel Macron weighed on the market. Investors feared that a common European approach to defense spending could be lost sight of. However, the markets tend to exaggerate political risks, wrote the strategists at Swiss bank UBS. A lot of negative factors have now been priced in.

Meanwhile, Germany reported to NATO estimated defense spending of 90.6 billion euros for the current year, which would currently put it well within the alliance's two percent target. According to a NATO overview, the record sum corresponds to a share of the forecast German gross domestic product (GDP) of 2.12 percent. This would be higher than expected at the beginning of the year.

According to the latest estimates, the 32 current NATO states will spend a total of around 1.5 trillion US dollars on defense in 2024. Adjusted for inflation and exchange rate fluctuations, this would correspond to an overall increase of 10.9% compared to the previous year.

Against this backdrop and in the wake of the market recovery since Monday, investors also bought into defense stocks. Boosted by a buy recommendation, shares in the armored gear manufacturer Renk, which has since been promoted to the second-line index SDax, gained three percent to around 26 euros. Analysts Kepler Cheuvreux have now issued a buy recommendation after temporarily suspending their rating and previously issuing a hold recommendation. The analysts pointed to the company's strategic position, the geopolitical risks, the dynamism of the sector and the potential for orders. They see the recent share price weakness as a good buying opportunity.

Renk has only been listed on the stock exchange since February and impressed investors in the first two months with a fireworks display. While the initial price at the stock market debut was 17.50 euros, it subsequently rose to almost 40 euros by the beginning of April - but then fell again just as rapidly, although a placement by the main owner and financial investor Triton in May did not have a lasting negative impact.

In the Dax, Rheinmetall gained 1.3 percent on Tuesday, bringing it closer to the EUR 500 mark, which has served as support during the consolidation since the beginning of April. In the MDax, Hensoldt's shares continued their upward trend, gaining one percent after recently reaching their lowest price since the end of February.

Defense stocks also rose in other countries on Tuesday, with Leonardo from Italy posting particularly strong gains of 2.5 percent. Babcock and BAE Systems from the UK and Thales from France recorded more moderate gains./ajx/edh/jha/