Europeans would need to ramp up military spending quickly, a notion that has set off a market rally, led by defense stocks.

European shares soared to record highs driven by increased anticipation of military spending. The STOXX 600 index rose 1.1%, and major European indexes closed at record levels, fueled by potential Ukraine peace proposals and intentions to boost defense expenditures across the continent.

A Goldman Sachs Group basket of European defence stocks rose as much as 16% to a fresh record, extending its year-to-date gain to 63%.

Rheinmetall, Europe's top ammunition maker, intends to repurpose two of its automotive plants in Germany to mostly make defence equipment, highlighting the impact of an expected surge in spending in the region amid U.

Israel and Ukraine both purchase weaponry from Rheinmetall's South African facility. The US Department of Defense recently announced that South Africa is a member of the Ukraine Defence Contact ...