European equities hovered near all-time highs on the final trading day of 2025, capping their strongest annual performance since 2021.
The STOXX 50 rose 0.7% to 5,791 points, while the broader STOXX 600 added 0.5% to 592 points.
For the year, the STOXX 50 finished up about 18%, marking its third consecutive annual gain, while the STOXX 600 advanced 17%, supported by resilient economic growth and expectations of increased fiscal spending across the region.
Banks were the standout performers, delivering their strongest showing since 1997, followed by basic resources, buoyed by higher prices for precious metals.
Utilities also contributed, benefiting from rising power demand linked to data centers and broader electrification trends.
Looking ahead, European equities are expected to maintain momentum into the new year as investors seek value and diversification beyond US markets, amid a weaker dollar, persistent geopolitical tensions, and growing concerns over an AI-driven market bubble.