European defence stocks at two-month high after US move on Venezuela

Jan 5 (Reuters) - Shares in defence stocks were leading gains in Europe on Monday, following U.S. military action in Venezuela at the weekend that supported the sentiment for the sector.

An index of aerospace and defence companies .SXPARO was up around 3.2% at 0902 GMT, to its highest since late October, compared to a 0.4% rise on the pan-European STOXX 600 .STOXX index.

Germany's Hensoldt HAGG.DE, Rheinmetall RHMG.DE, Renk R3NK.DE all rose between around 6% and 7% and were among the top gainers on the STOXX.

Italy's Leonardo LDOF.MI was also up some 6% and Sweden's SAAB SAABb.ST moved 6.7% higher, while BAE Systems BAES.L, Thales TCFP.PA, Dassault Aviation AM.PA each rose around 4%.

Spain's Indra IDR.MC also rose some 6%.

Jefferies analysts said in a note the U.S. strike on Venezuela removes one of the key items of Washington's foreign policy focus, which might now turn to Greenland, and reaching a ceasefire in Ukraine, which has been a major overhang on the sector.

The deployment of European troops to Greenland may be once again on the agenda, the analysts noted.

"These developments would support European defence names today, in our view, further reinforcing the need to raise defence budgets quickly," they said.

France reiterated on Monday its support of the sovereignty and territorial integrity of Denmark and Greenland following renewed threats by U.S. President Donald Trump to take over Greenland.