Weapons maker BAE Systems is the big loser on the FTSE 100 this morning, with its shares down almost 3% in early trading.
It comes following reports over the weekend that the German government is planning to scale back aid to Ukraine in its war with Russia – in what would be a blow to the arms industry.
German media said ministers are set to slash support for Kyiv to 6% of current levels by 2027 in their upcoming budget.
However, the government there has rejected the reports and has denied it is “stopping support” to Ukraine.
Whatever the truth, the reports appear to have spooked traders.
Other companies involved in the defence sector, including Rolls-Royce Plc and Chemring Group, are also down more than 2% and 1% respectively on Monday.
It comes amid a slight slump in early trading, with the FTSE 100 down just over 0.2%, although the FTSE 250 is up 0.07%.
Gainers this morning include housebuilders Barratt Developments, up 1.5%, and Redrow Plc, which is up almost 3%.
Barratt said today it intends to push ahead with a planned £2.5bn merger with its rival despite concerns from the competition regulator.
Meanwhile, the price of oil is down amid concerns of weaker demand in China.
Ongoing ceasefire talks in the Israel-Hamas conflict have also raised hopes of cooling tensions in the Middle East, which would help ease supply risks and worries.
A barrel of the benchmark Brent Crude is currently priced at just over $79 (£61).
On the currency markets, this morning £1 buys $1.29 US or €1.17.
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