European defence stocks are soaring once again as the continent's leaders vow to boost military spending after Donald Trump warned he would 'not put up with' Volodymyr Zelensky for much longer.

Shares in industry giants including BAE Systems and Rolls-Royce in Britain, Rheinmetall in Germany and Thales in France are all scaling record highs - making a fortune for investors who own the stocks.

An index tracking European aerospace and defence shares also hit an all-time high.

The rally may leave observers wondering - what next?

Those with shares will want to know if they should sell or hold on; those without whether they have missed the boat or should invest.

Analysts at JP Morgan believe the Continents' drive to re-arm its military forces has been 'turbocharged' in recent days.

It follows a heated White House meeting between Ukrainian President Mr Zelensky and Mr Trump last week, which increased a sense of urgency for Europe to act faster on security spending.

At an urgent summit in London on Sunday, Sir Keir Starmer pledged to build a 'coalition of the willing' to defend a peace deal in Ukraine.

The prospect of higher European demand for everything - from weapons and ammunition to fighter jets, tanks and warships - has made stocks in defence firms surge

Addressing leaders from France, Germany, Canada, Italy, Nato and the EU, the Prime Minister said Europe must do the 'heavy lifting' on defence.

He unveiled a £1.6billion deal to allow Ukraine to buy more than 5,000 missiles to be made by French defence giant Thales in Belfast.

That came after Chancellor Rachel Reeves used profits from frozen Russian assets to fund a £2.3billion loan scheme to help Kyiv buy weapons.

The summit was attended by Zelensky, who later met the King at Sandringham.

It was a show of solidarity following his dramatic clash with Trump in the Oval Office.

The televised row sparked fears of an irrevocable rupture between the two leaders and reinforced the need for European nations to bolster their own security. RBC Capital Markets analyst Peter Schaffrik said it was 'an inflection point'.

'The whole Zelensky-Trump meltdown has fast-forwarded everything,' he said.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the clash had 'brought the need for Europe to increase collective security into sharp focus'.

And the European summit had 'a direct read-across to defence stocks on the markets', said Russ Mould, investment director at broker AJ Bell.

The situation may become even more urgent in the coming days after Trump's latest outburst against Zelensky.

The US president has warned he could pull the plug on funding for Kyiv altogether after his angry clash with the Ukrainian leader.

Pressure is now mounting on European countries to increase defence spending and Sir Keir has said the UK must 'lead from the front' in forming a 'coalition of the willing' capable of securing peace in Ukraine.

He last week pledged to increase the defence budget from 2.3pc to 2.5pc of GDP and Rachel Reeves has relaxed the rules to allow Britain's £28billion sovereign wealth fund to invest in defence.

Nigel Green, boss of financial advisory firm deVere Group, said: 'Defence spending is set to climb for years to come.'

He explained: 'With European leaders scrambling to reinforce their military capabilities after the US distanced itself from security commitments, defence companies stand to be major beneficiaries.

'We believe that this is likely to be the beginning of a fundamental realignment that will shape markets for the foreseeable future.

'The shift is structural. Governments across Europe are coming to terms with the fact that their decades-long reliance on US military backing can no longer be taken for granted.

'The Trump administration's refusal to provide clear security guarantees has made it clear that Europe must shoulder more of the burden itself. This will translate into significant, sustained increases in defence budgets.

'The market is already waking up to this reality, and those who act now stand to gain the most.

'This realignment is not confined to Europe. Across the globe, military expenditures are surging as nations recalibrate to a world defined by intensifying rivalries and fractured alliances.'

Here we look at some of the major UK and European defence companies and whether investors should buy their shares amid the turmoil.

BAE Systems - London, UK

BAE Systems - one of the biggest defence companies in the world - makes submarines, fighter jets, combat vehicles, missiles, electronic warfare systems and naval ships.

The London-headquartered company is involved in manufacturing the F-35 fighter jet and is leading the Dreadnought submarine project for the UK's nuclear deterrent programme.

Shares in BAE Systems have almost trebled since the build up to Russia's invasion of Ukraine a little over three years ago. The stock is up 40pc so far this year.

BAE is involved in manufacturing the F-35 fighter jet and is leading the Dreadnought submarine project for the UK's nuclear deterrent programme

And it is one of the firms most likely to benefit as European countries ramp up their defence budgets.

Richard Hunter, at Interactive Investor, said the FTSE 100 firm is 'one of the preferred plays' in the sector.

'The group enjoys a diversity by both product and geographical region,' he said.

Morningstar analyst Michael Field said BAE is one of the most 'attractive' defence stocks. 'It is a pure play on the defence sector with embedded positions in areas such as the F-35 fighter jet and Tempest Eurofighter,' he said.

Matt Dorset, equity analyst at Quilter Cheviot, said that 'BAE's scale, relationships, and diverse range of products provide a clear opportunity to capture increased demand from higher European defence equipment spending'.

Of the 18 analysts covering the stock, four rate BAE as a 'strong buy' while seven tip it with a 'buy' rating. Six more rate it as a 'hold' and only one as a 'sell'.

Rolls-Royce - London, UK

Shares in London-headquartered Rolls-Royce are up more than six-fold since the invasion of Ukraine and nearly 40pc this year.

The FTSE 100 company has undergone a major revamp under the leadership of chief executive Tufan Erginbilgic.

Rolls-Royce has less exposure to defence than rivals such as BAE as only 26pc of its sales come from those operations - and much of that is outside the UK and Europe.

The company is primarily focused on the civil aerospace market. But it will still benefit from an uptick in defence spending across Europe.

'The company produces engines for various combat vehicles, including fighter jets, submarines, ships and helicopters, all of which could see an uptick in demand if equipment spending increases,' Quilter Cheviot's Dorset said.

Rolls-Royce has 'been on something of a tear recently', Interactive Investor's Hunter said.

'Shares have risen over the last two years, with no immediate lack of investor appetite in sight,' he said.

Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: 'Much progress has been made in a short period.

'With dividend payments set to be reinstated this year, there are plenty of reasons for investors to remain positive about Rolls-Royce's future.'

Brokers on average are bullish on Rolls-Royce, with 13 analysts out of 18 rating it as a 'strong buy' or a 'buy'.

Chemring - Romsey, UK

Chemring is aiming to double annual revenues to £1billion by the end of the decade.

Analysts said the target is looking increasingly realistic as sales are set to be boosted by increased defence spending.

That comes after the company already revealed a record order book at the end of last year.

UK-based Chemring makes tech that can protect against missiles as well as explosive, chemical and biological detection tools

The firm, which is headquartered in Romsey, Hampshire, has also emerged as a potential takeover target. US private equity firm Bain Capital is said to have £1.1billion offer worth 390p a share.

But Jamie Murray at Shore Capital Markets says a successful bid would need to over 500p share - or £1.4billion and well above the current price of around 400p.

If Bain is serious, and such an offer materialises, the shares could soar.

The company makes tech that can protect against missiles, as well as explosive, chemical and biological detection tools.

Its 'exposure to specialist areas such as electronic warfare, secret cloud and cyber security' set it apart from rival defence firms, analysts said.

Quilter Cheviot's Dorset said that as Chemring makes 45pc of its sales in the UK and 17pc in Europe, it is 'likely a material beneficiary of increased defence spending'.

'Chemring provides various technological solutions for defence markets, including expendable countermeasures to protect air and sea platforms from missile threats and sensor technology,' he said.

'Chemring is already providing military capabilities to Germany, France Italy and Spain and is gaining increased traction in Europe, which will only be bolstered by the expected increase in demand.'

Of the five analysts covering Chemring, all are positive, with two marking it as a 'strong buy' while the remaining three give it a 'buy' rating.

Rheinmetall - Dusseldorf, Germany

Based in Dusseldorf, Rheinmetall is Germany's largest arms manufacturer, constructing a range of military products ranging from battle tanks, anti-aircraft guns and tactical equipment for infantry.

One of its most recognisable products is the Challenger 2 main battle tank, currently used by the British Army.

Since the start of 2022, the company's share price has risen almost 14-fold, and the stock is up almost 90pc this year.

Based in Dusseldorf, Rheinmetall is Germany's largest arms manufacturer, constructing a range of military products ranging from battle tanks to anti-aircraft guns

The company is a key partner of the Ukrainian military, supplying it with ammunition for its tanks and air defence systems as well as training the country's maintenance and repair specialists.

Of the 18 analysts who cover the Rheinmetall stock, five of them rate it as a 'strong buy' alongside another ten who have it with a 'buy' rating, suggesting the market believes it has further to rise in the future.

Charu Chanana, chief investment strategist at Saxo Bank, said Rheinmetall could be among the companies which 'may benefit' from increased defence spending by Nato countries if they respond to calls from the US to up targets.

Saab - Stockholm, Sweden

Swedish group Saab counts missile systems, radars and airborne surveillance among its main products.

In Ukraine, its most famous product is undoubtedly the NLAW, a shoulder-mounted missile launcher designed to destroy tanks and other armoured vehicles.

The UK supplied more than 2,000 NLAWs to the Ukrainian military in the lead-up to the invasion and another 1,600 shortly after the war began after the compact and lightweight launcher proved devastating against columns of Russian armour.

Demand for Saab's products has pushed its share price up more than six-fold since the start of 2022 invasion. They are up more than 50pc so far this year.

Analysts are upbeat on the stock, with two rating it as a 'strong buy' and another one at 'buy' compared to five rating it a 'hold' in a sign that further rises could be possible.

Thales - Paris, France

Paris-based aerospace group Thales specialises in technology such as electronic warfare, air defence and communications systems.

Its Ground Master 200 radar system was previously donated to Ukraine by the French government to boost the country's air defences.

In September last year, the UK Government announced that it would supply 650 lightweight missile systems to Ukraine which would be built by Thales at its factory in Belfast.

Like its defence sector counterparts, Thales shares have risen strongly since the build up to war in Ukraine, with the stock more than tripling since the start of 2022.

Of the 18 analysts covering the stock, ten rate it as either a 'strong buy' or a 'buy' with only one giving it a 'sell' rating.

The company last month signed a new joint venture deal with a Ukrainian state-owned conglomerate to expand its business in the country.

Leonardo - Rome, Italy

Italian group Leonardo specialises in the building of fighter aircraft and helicopters.

The Rome-based firm is one of the key players behind the Eurofighter Typhoon jet alongside BAE Systems and Airbus.

It also manufactures cargo aircraft and surveillance planes and is one of the largest suppliers to the UK Ministry of Defence.

The stock has risen seven-fold over the past three years as it rode a wave of increased defence spending amid growing doubts about global stability.

Analysts have Leonardo shares among those with strong growth prospects, with five analysts considering it a 'strong buy' and another eight with a 'buy' rating out of 15 covering the company. Just one says 'sell'.

The company is likely to be a key beneficiary of a campaign by Italy and other EU nations to push for defence spending to be exempt from the bloc's debt rules to boost the armed forces.