The shares of European defence companies rose on Thursday, after NATO leaders supported the demand for increased defence spending by U.S. president Donald Trump on Wednesday.

At 0814 GMT on Friday, German company Rheinmetall, and Italian Fincantieri (which announced Thursday that it had received an order for 700 million euros, or $820.89 million), were among the biggest gainers. They rose between 3% to 6%.

The broader European Defence Index, which has risen 49% this year on the back of the change in attitude towards the sector, rose 1.3%.

On Wednesday, countries pledged to spend 3,5% of their GDP on core defense and 1.5% for broader measures of defence. This is a huge jump from the current target of 2%.

Analysts at J.P. Morgan say the market has a lukewarm attitude towards the targets that are set to be met over the next ten years.

In a client note, they stated that "the European defense companies and European defense investors with whom we speak do not believe most European countries will have the ability to spend 3,5% of their GDP on core defence in the next five to ten years."

Tom Guinchard is an equity research analyst with Pareto Securities. He said that the defence industry would focus on Northern Europe, Germany, and the Baltics. These are the most likely countries to achieve their targets.

Guinchard said that Spain had already been granted an exception last week. "France is going to have difficulty leveraging up until 3.5% of its GDP, and the majority of southern countries will be very hesitant." $1 = 0.8527 Euros (Reporting and editing by Matt Scuffham, Paolo Laudani in Gdansk, Ozan Ergenay in Istanbul; Anna Pruchnicka reporting from Gdansk)

(source: Reuters)