Investing.com - A pause in the ongoing conflict between Russia and Ukraine may help ease fiscal and economic burdens on European governments, according to analysts at Barclays (LON:BARC).
On Friday, the Kremlin called for patience around the timing of a possible discussion between Russian President Vladimir Putin and his new U.S. counterpart Donald Trump.
A Kremlin spokesperson also played down reports that the envoy Trump had sent to both Russia and Ukraine, Keith Kellogg (NYSE:K), was looking to forge a truce even prior to a potential conversation on a peace settlement between Putin and Trump.
The spokesperson said there was "nothing substantive on this account yet," adding "we just need to be patient."
Trump has stated a goal of quickly bringing the hostilities to an end after several years of bloody fighting. Should he meet with Putin, the agenda is expected to center around this aim, Reuters has reported.
Earlier this week, a Russian state news agency quoted the head of the international affairs committee of the country's parliament as saying preparations for a Putin and Trump meeting were at "an advanced stage" and could happen in February or March.
A halt to the conflict could ease the strain on European governments, which have been hit by inflated deficits and stagflation since the outbreak of the fighting, the Barclays analysts said.
However, they noted that defense budgets are still likely to expand, particularly as Trump maintains an ongoing call for members of the NATO alliance to increase military spending.
Defense stocks in Europe, which have risen since the start of the Ukraine conflict in 2022, could subsequently offer a buying opportunity for investors, the analysts argued. They added that the "long term growth outlook for the sector remains strong."
Meanwhile, the rebuilding of Ukraine, which the World Bank has estimated could cost around $500 billion, will likely be "commodity-intensive, especially for steel and cement", the analysts said. They predicted that a number of European financial, industrial and materials stocks would likely benefit from the reconstruction effort.
(Reuters contributed reporting.)