Rheinmetall sinks 13% as Germany may drop $ multiwarship project

European defense shares fell sharply Wednesday after a report that Germany plans to abandon a multibillion-euro program to build six F126 frigates. Rheinmetall dropped as much as 13% in morning trading, while Hensoldt fell 5% and Renk lost 3.8%. The sell-off spread across the sector, with Sweden's Saab down 3.1%, Italy's Leonardo off 3.7% and Britain's BAE Systems lower by 1.6%. The Financial Times reported, citing two people familiar with the matter, that Berlin is preparing to scrap the warship order, which would have been Germany's biggest naval commission since World War II. The move stirred concern that expected gains for defense contractors from higher government spending may not fully materialize.