London’s FTSE 100 experienced a slight decline on Monday, influenced by the potential for a Russia-Ukraine ceasefire, which negatively impacted defence stocks during the final trading week of the year. U.S. President Donald Trump stated on Sunday that he and Ukrainian President Volodymyr Zelenskiy were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine, which led to a selloff in defense stocks in the UK and Europe.

Babcock International dropped 3%, Chemring Group shed 1.5%, while BAE Systems and Rolls-Royce fell 1.3% and 1.1%, respectively. The FTSE index of aerospace and defence slipped 1.2%. The UK’s blue-chip FTSE 100 was at 9,874.96 points at 1023, while the domestically focused midcap FTSE 250 index edged up 0.1% in quiet trading following a long weekend.

Market volumes are anticipated to stay muted in the upcoming holiday-shortened week, as UK markets are scheduled to close early on Wednesday and remain closed on Thursday for the New Year holiday. Geopolitical tensions have catalyzed a rally in defence stocks, which, alongside miners and banks, have been pivotal in propelling the FTSE 100 to a 20.7% increase this year. This positions the index for its fifth consecutive annual gain, surpassing the 15.8% rise of the pan-European STOXX 600 and the 17.8% increase of the Wall Street benchmark S&P 500 year-to-date.

Industrial metal miners were up 0.9% after copper set a record as last week’s sharp rally in Shanghai spilled into a Christmas holiday-curtailed global market. Among individual stocks, British lender International rose 5.4% after it agreed to a 543 million-pound ($732.5 million) takeover by a company associated with BasePoint Capital.