London Stocks Dip as Aerospace Shares Weigh, Optimism Over U.S. Rate Cut Limits Losses

London stocks started the week on a subdued note, with aerospace and defense shares dragging the FTSE 100 index down. Optimism over a potential U.S. rate cut in September helped limit losses. Investors are also keeping an eye on upcoming economic indicators and Federal Reserve commentary.

London stocks kicked off the week on a subdued note, pressured by declines in aerospace and defense shares. Investors, however, found some respite in the hope of a potential September rate cut in the United States, which helped limit the market's losses.

The blue-chip FTSE 100 index fell by 0.2% on Monday, following its best week since May. The FTSE 250 index remained flat as of 0710 GMT. Aerospace and defense stocks dropped by 1.3%, impacted by reports that the German federal government is expected to reject new military aid requests for Ukraine due to budget constraints.

Shares of Bae Systems decreased by 2%, while Rolls-Royce and Chemring each fell by more than 1%. Energy stocks also edged down by 0.2% due to lower crude prices, and banks slipped by 0.1%. In contrast, miners of precious and industrial metals gained 0.7% each, fueled by high gold prices and eased recession fears in the U.S. Additionally, real estate shares showed marginal improvement after Rightmove reported an uptick in buyer interest following the Bank of England's rate cut.

Investor sentiment was bolstered by last week's data indicating slowing inflation in the U.S., which alleviated concerns of an economic slowdown and followed a global stock sell-off earlier in August. All eyes are now on Federal Reserve Chair Jerome Powell's comments at the Jackson Hole event later this week and upcoming economic indicators from the U.K. and U.S. Among individual stocks, Plus500 surged by 4.1% topping the FTSE 250 after forecasting strong annual results and a 13% increase in new customers for the first half of the year.

(With inputs from agencies.)