London close: FTSE dips in risk-off mood; defence stocks drop

London stocks closed in the red on Monday, with markets in a risk-off mood and defence names under the cosh amid Ukraine peace hopes.

The FTSE 100 ended down 0.2% at 9,702.53.

Danni Hewson, head of financial analysis at AJ Bell, said: "There was little sign of a ‘Santa Rally’ today as London markets slunk into December, dragged down by ongoing Wall Street jitters about whether Fed rate setters will reach an agreement to cut later this month.

"With nine days to go until the Fed’s next decision, the lack of data thanks to that record government shutdown has left many investors trying a spot of divination in the tea leaves rather than in the small print. Another slump in US manufacturing might be the bad news that settles nerves, even as it raises more questions about the state of a US economy weighed down by tariffs.

"There was good news on tariffs for the UK, with a deal struck to maintain the current zero tariffs on pharmaceutical exports. But there was little market reaction, with GSK up a fraction and AstraZeneca ending the day down a touch.

"Both companies have already announced multi-billion pound investments into the US - something investors had anticipated would give them favourable treatment from a president focused on US manufacturing capabilities.

"Gold, silver and oil have all had a good day, helping to lift London listed miners and energy giants Shell and BP, with the oil price boosted by concerns about US relations with Venezuela. Global events also had a negative impact on UK defence stocks as the US president said there was a ‘good chance’ of a deal to end the war in Ukraine."

On the macro front, a survey showed the UK manufacturing sector returned to growth in November.

The S&P Global manufacturing purchasing managers’ index rose to a 14-month high of 50.2 from 49.7 in October. This was the first reading above the 50.0 mark that separates contraction from expansion since September 2024.

The latest survey was conducted between 12 and 25 November, closing before the Autumn Budget.

S&P Global said manufacturers benefited from improved domestic demand and a softer contraction in new export work.

Rob Dobson, director at S&P Global Market Intelligence, said: "The numbers are especially encouraging as this improvement occurred despite November seeing elevated levels of business uncertainty, and in some cases an element of gloom, ahead of the Autumn Budget.

"The lifting of this uncertainty caused by the long lead-in to the Chancellor's budget announcement should hopefully provide a boost in December, but it will be interesting to see the extent to which business might react to the absence of any significant growth-promoting measures. After all, despite the improvement in the performance of the manufacturing sector, any growth is still worryingly weak.

"Rising competitive pressures and slower cost inflation meanwhile led to factory gate prices being cut for the first time in over two years. This combination of soft industrial performance and subsiding price pressures will add to the shift in policy debate away from inflation fears towards supporting economic growth."

Separately, figures from the Bank of England showed that mortgage demand eased slightly in October, with net mortgage approvals for house purchase down to 65,018 from 65,647 in September.

Approvals for remortgaging fell by 3,600 to 33,100, which was the lowest since February 2025.

Net borrowing of mortgage debt by individuals fell back to £4.3bn in October, after a rise to £5.2bn in September.

In equity markets, aerospace firm Melrose Industries slumped as it said its chief financial officer Matthey Gregory was stepping down. Melrose said Gregory has informed the board he plans to retire in 2026, two years after taking up the role.

He will be replaced by Ross McCluskey, a vice president at testing and inspection specialist Intertek Group.

Defence firms were under the cosh, with Rolls-Royce, Babcock and BAE Systems all lower after US Secretary of State Macro Rubio said talks between US and Ukrainian officials on Sunday had been "productive".

Big Yellow tumbled following a Sky News report that Blackstone is seriously contemplating abandoning its interest in a deal ahead of a December 8 deadline imposed by the Takeover Panel.

Trig fell sharply after its multi-billion merger with HICL Infrastructure was abandoned due to widespread opposition from shareholders.

HICL said in a brief statement that the proposed combination, first announced in mid-November, "will not proceed".

"Both boards remain convinced of the strategic rationale for the combination," it said. "However, following broad engagement with shareholders, the HICL board determined that it cannot progress the transaction without a substantial majority of support from its own investors."

HICL shares rose.

Precious metals miner Fresnillo and gold miners Hochschild and Endeavour shone as gold and silver prices rose, while miners Antofagasta, Glencore and Anglo American pushed higher in tandem with copper prices.

Plus500 shot up as it announced its appointment as the clearing partner for the CME and FanDuel's new event-based contracts platform.

Greggs shares rallied following a report the bakery chain is being urged by activist investor Lauro Asset Management to cut tens of millions of pounds of annual costs over fears it will otherwise fall prey to a cut-price takeover bid.

According to The Sunday Times, David Mercurio of the Singapore-based hedge fund has attacked Greggs’ "timid" management after the company’s share price plunged 44% this year, giving it a stock market value of £1.6 billion.

Market Movers

FTSE 100 (UKX) 9,702.53 -0.18%
FTSE 250 (MCX) 22,020.68 -0.65%
techMARK (TASX) 5,530.47 -0.75%

FTSE 100 - Risers

Fresnillo (FRES) 2,820.00p 7.06%
Reckitt Benckiser Group (RKT) 5,994.00p 2.43%
Burberry Group (BRBY) 1,166.00p 2.33%
Antofagasta (ANTO) 2,820.00p 2.25%
Rentokil Initial (RTO) 422.50p 1.51%
Anglo American (AAL) 2,892.00p 1.44%
Hikma Pharmaceuticals (HIK) 1,575.00p 1.35%
Entain (ENT) 787.00p 1.29%
Games Workshop Group (GAW) 19,630.00p 1.13%
Bunzl (BNZL) 2,188.00p 1.11%

FTSE 100 - Fallers

Melrose Industries (MRO) 567.40p -4.64%
3i Group (III) 3,044.00p -3.61%
Rolls-Royce Holdings (RR.) 1,037.00p -2.90%
Babcock International Group (BAB) 1,104.00p -2.56%
BAE Systems (BA.) 1,609.50p -2.48%
BT Group (BT.A) 177.00p -2.18%
Aviva (AV.) 640.00p -1.81%
Vodafone Group (VOD) 92.36p -1.77%
WPP (WPP) 298.70p -1.68%
Centrica (CNA) 168.80p -1.57%

FTSE 250 - Risers

Plus500 Ltd (DI) (PLUS) 3,380.00p 6.49%
Greggs (GRG) 1,661.00p 6.47%
Hochschild Mining (HOC) 417.80p 3.67%
Endeavour Mining (EDV) 3,612.00p 3.50%
HICL Infrastructure (HICL) 117.00p 3.36%
Pinewood Technologies Group (PINE) 365.00p 2.53%
Discoverie Group (DSCV) 605.00p 2.20%
Energean (ENOG) 957.50p 1.97%
GCP Infrastructure Investments Ltd (GCP) 73.20p 1.95%
Ithaca Energy (ITH) 176.40p 1.73%

FTSE 250 - Fallers

Big Yellow Group (BYG) 1,086.00p -6.38%
PPHE Hotel Group Ltd (PPH) 1,828.00p -5.09%
PayPoint (PAY) 464.50p -4.81%
Ceres Power Holdings (CWR) 355.00p -4.26%
The Renewables Infrastructure Group Limited (TRIG) 71.10p -4.18%
Telecom Plus (TEP) 1,516.00p -4.17%
Baltic Classifieds Group (BCG) 227.50p -3.81%
Safestore Holdings (SAFE) 714.00p -3.71%
Ocado Group (OCDO) 177.65p -3.63%
Hays (HAS) 55.75p -3.21%