London stocks kick off Q4 on higher note, BAE Systems shines

London stocks opened slightly higher on the first trading day of the last quarter of 2023 on Monday, with defence firm BAE Systems among top gainers on the large-cap index after winning a contract to build attack submarines. The exporter-heavy FTSE 100 inched up 0.1% amid holiday-thinned trade in some markets including top-consumer China.

London stocks opened slightly higher on the first trading day of the last quarter of 2023 on Monday, with defence firm BAE Systems among top gainers on the large-cap index after winning a contract to build attack submarines.

The exporter-heavy FTSE 100 inched up 0.1% amid holiday-thinned trade in some markets including top-consumer China. BAE Systems added 1.7% after Britain awarded the defense firm a 4 billion pound ($4.9 billion) contract as part of the AUKUS programme with Australia and the United States to build attack submarines. The stock was further boosted by a rating upgrade to "Buy" by brokerage Berenberg.

The broader aerospace and defense sector added 1%. "BAE Systems have outperformed the stock market over the last year... driven by increased demand for defence spending amid the geopolitical uncertainty," Victoria Scholar, head of investment at interactive investor said.

Antofagasta led heavy-weight miners higher, jumping 2.2% after Citigroup raised the stock to "Buy" from "Hold". The more domestically-focussed FTSE 250 added 0.5% by 0812 GMT.

The large-cap index FTSE 100 closed the previous quarter higher, as investors took comfort from the local economy staying on the trajectory of growth, amid signs of cooling inflation that triggered a recent skip in rate hikes by the Bank of England. Pennon Group rose 4.1% and United Utilities gained 2.8% after the water companies outlined their respective investment plans over the next five-year regulatory period.

Natwest, however, shed 1.0% after brokerage Morgan Stanley downgraded the lender to "Equal-weight" from "Overweight". Among small-caps, XP Power sank 45.5% after the provider of power converters issued a profit warning.

Domestic manufacturing activity slowed sharply in September, though less steeply than the month before when it shrank at the fastest rate in more than three years, a survey showed. UK house prices in September fell 5.3%, matching their biggest annual drop since 2009 in August, as per mortgage lender Nationwide.

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