European defence stocks slip after record run

Shares in European defence companies slip on Thursday, with an analyst pointing to profit taking after their record-breaking run

Europe's aerospace and defence index .SXPARO is set for its biggest daily drop in 2 years, down 2.8% at 1155 GMT after hitting a fresh record high on Wednesday

The index added some 8% since European leaders agreed they must spend more on defence; it is up 33% YTD

"Following the sharp rise in share prices triggered by the news flow surrounding the German financial package for defense, speculative investors are now taking profits: sell on good news. Such a correction was overdue," LBBW analyst Stefan Maichl says

Still, Maichl notes the companies are likely to remain an attractive medium to long-term investment due to the emerging strong growth prospects

"The decisive factor now is what budget target NATO agrees on at the summit in den Haag in June," he adds

Germany's Hensoldt HAGG.DE, Rheinmetall RHMG.DE, Renk R3NK.DE are leading losses, all falling between 5.6% and 6.3%

France's Dassault Aviation AM.PA, Italy's Leonardo LDOF.MI fall around 4%

Britain's BAE Systems BAES.L slides 2.8%