Defence Stocks Propel FTSE 100 to Record Highs Amid Military Spending Surge

Britain's FTSE 100 hit a record high as defence shares rallied on the prospect of increased military spending in Europe. European leaders agreed to bolster defence budgets following tensions between the U.S. and Ukraine. Key beneficiaries included BAE Systems and Rolls-Royce Holdings.

Britain's FTSE 100 index soared to new heights as defence stocks surged, driven by anticipation of increased military spending across Europe. The blue-chip index climbed by 0.7% to reach an all-time high, while the midcap FTSE 250 rose by 0.3%.

European leaders, responding to geopolitical tensions, agreed to enhance defence budgets. This agreement, coming shortly after a clash between Ukrainian President Volodymyr Zelenskiy and U.S. President Donald Trump, highlights the continent's push to bolster its self-defence capabilities. The FTSE 350 aerospace & defence index significantly rose by 8.1%, marking a record high and a yearly gain of over 25%.

BAE Systems emerged as a substantial gainer, rising 14.6% in the FTSE 100, with Rolls-Royce Holdings also climbing 4.4% amid broader defence stock rallies. Meanwhile, Senior Plc saw an 8.5% increase as it negotiated the sale of its aerostructures business, while Bunzl experienced a notable decline after reporting lower annual profits.

(With inputs from agencies.)