The UK’s blue-chip FTSE 100 experienced a modest increase on Tuesday, buoyed by advancements in defence stocks, which mitigated the decline in shares of British American Tobacco after a disappointing growth outlook. The FTSE 100 rose 0.1% by 1130, while the domestically oriented FTSE 250 index added 0.2%. BAT opened a new tab and fell 2.9% after the Dunhill maker indicated that it anticipates its 2026 results will align with the lower end of its mid-term targets, as regulatory pressures and competition in the U.S. vape market undermine robust growth in other areas of its portfolio.

Defence stocks experienced an upward trend throughout Europe following a report from Bloomberg News indicating that German lawmakers are poised to sanction procurement contracts totaling a historic 52 billion euros in the upcoming week. Shares of BAE Systems rose 2.3%, while Rolls-Royce added 0.5%. Global investors exhibited a predominantly cautious stance in anticipation of the Federal Reserve’s monetary policy decision on Wednesday. Traders are largely positioning themselves for a 25 basis point rate cut, influenced by mixed economic indicators and dovish remarks from several Fed officials.

The Bank of England is anticipated to lower interest rates at its upcoming policy meeting, reflecting indications of a weakening labor market and a deceleration in inflation rates. Barclays reported a 1.1% decline in spending by UK consumers on its credit and debit cards in November compared to the previous year, marking the most significant decrease since February 2021, a period still heavily impacted by the pandemic. A distinct survey indicated that expenditure at major retailers increased by 1.4% year-on-year last month, marking the slowest growth rate since May.

Unilever has announced that it will consolidate its shares at a ratio of eight new shares for every nine existing shares, following the completion of the demerger of its ice cream business, Magnum. Among other movers, Man Group rose 3.5% after J.P. Morgan upgraded the hedge fund to “overweight” from “neutral.” British greeting card retailer Moonpig opens new tab rose 3.3% after posting upbeat interim profit and sales growth.