European defense stocks have experienced a significant decline, dropping to near two-month lows as the U.S. and Ukraine make notable progress on a new peace plan aimed at resolving the ongoing conflict with Russia. The selloff in defense shares comes alongside a rally in Ukrainian and Russian stocks, reflecting shifting investor sentiment amid hopes for peace. Reports indicate that the discussions are pushing European defense companies to retreat, causing major fluctuations in the market as investors reassess the potential impacts on future defense spending and regional stability. The news has led to a mixed response in U.S. futures and broader European shares, as markets digest the potential long-term effects of a peace settlement.