European defense stocks fell on Monday after comments from U.S. President Donald Trump signaled fresh momentum in peace talks between Ukraine and Russia.

Rheinmetall fell 2.1%, Leonardo dipped nearly 4%, while BAE Systems and Thales each shed around 1.5% by 09:04 GMT.

Trump said he had made “a lot of progress” in discussions with Ukrainian President Volodymyr Zelenskiy on a possible peace deal, though he cautioned that negotiations could still take weeks and that there was no fixed timeline.

Speaking to reporters after meeting Zelenskiy at his Mar-a-Lago estate, Trump said Moscow and Kyiv were “closer than ever” to reaching an agreement, following an earlier phone call with Russian President Vladimir Putin on Sunday. Trump said that he plans to speak again with Putin after his meeting with Zelenskiy.

Zelenskiy said a 20-point peace plan presented last week was “90 percent agreed” and that U.S.-Ukraine security guarantees were “100 percent agreed” to.

“We agreed that security guarantees are key milestone in achieving lasting peace, and our teams will keep working on all aspects,” he said.

Despite the upbeat tone, the discussions stopped short of a breakthrough on the most sensitive issues, particularly the question of Ukrainian territory.

Trump acknowledged that one or two “very tough” matters remain unresolved, including the status of the eastern Donbas region, which Russia annexed following its full-scale invasion in 2022.

Trump said negotiations were moving closer toward a U.S. proposal to establish a “free economic zone” in parts of the region, which would involve a Ukrainian military withdrawal as part of a broader settlement.

“I would not say agreed, but we’re getting closer to an agreement on that, and that’s a big issue. Certainly, that’s one of the big issues, and… it’s unresolved,” he said.

Zelenskiy reiterated that any decision on territory must ultimately be made by Ukrainians themselves, suggesting that elements of the peace plan could be put to public referendums.