London-listed defence stocks fell on Monday following reports that Germany is planning to slash military aid to Ukraine.
German newspaper FAZ said Germany’s Defence Ministry plans to reject additional requests for assistance after providing previously-agreed aid.
BAE Systems shares are among those flying high this year in response to geopolitical conflict
The reports drove defence stocks across Europe lower, with the FTSE All-Share Aerospace and Defence sector falling as much as 1 per cent in early trading.
BAE Systems shares led losses approaching midday, falling 2.5 per cent, while Rolls-Royce was down 1.3 per cent, and Melrose, Babcock and Chemring were also down between 0.5 and 1 per cent each.
Earlier this summer, the German government announced it would halve funding for Kyiv from a current level of €8billion (£6.8 million) to just €4billion by 2025.
A draft budget reportedly seen by the Frankfurter Allgemeine Zeitung newspaper reveals further cuts, with spending slashed to just €500million in 2027.
But Ukraine’s Foreign Ministry has dismissed the reports, describing them as a ‘manipulation’ to local news agency Ukrinform.
The Ukraine war has proved a major tailwind for the defence sector, with greater geopolitical driving military spending higher globally.
The FTSE All-Share Aerospace and Defence sector is up 68.8 per cent over the last year.
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