(Sharecast News) - London stocks edged lower in early trade on Thursday amid rising geopolitical tensions, but defence issues surged on the back of US President Trump's latest spending plans, while retailers were in focus following a flurry of updates from the sector.
At 0835 GMT, the FTSE 100 was down 0.2% at 10,028.61.
Sentiment took a hit after the US seized two oil tankers on Wednesday linked to Venezuelan oil exports in the North Atlantic and the Caribbean, one of which was a Russian-flagged vessel.
Kathleen Brooks, research director at XTB, said: "Risk sentiment remains fragile this morning, as geopolitical tensions continue to flare up."
On home shores, the latest figures from Halifax showed that house prices fell 0.6% on the month in December following a 0.1% decline in November, missing expectations for a 0.2% increase.
On the year, house prices rose 0.3% in December following a 0.6% jump the month before. Analysts were expecting an annual increase of 1.1%.
The average price of a property stood at 297,755 in December - the lowest since June 2025 - down from 299,544 a month earlier.
Amanda Bryden, head of mortgages at Halifax, said: "While this may feel like a subdued close to the housing market in 2025, overall activity levels were resilient over the last year and broadly in line with the pre-pandemic average.
"Various forces are poised to somewhat buoy the market heading into 2026. While December's monthly fall in prices was likely related to uncertainty in the latter part of the year, this should now be starting to unwind. Further, mortgage rates are already reducing following the latest Base Rate cut and there are an increasing number of lending options available for those borrowing at a higher loan-to-value.
"While affordability pressures persist, the house price to income ratio was at its lowest in over a decade in December, striking a positive note for those looking to purchase their first home.
"On this basis, and recognising the headwinds that may affect buying power - such as the slowing of wage inflation and flattening employment rates - we expect a modest rise in house prices during the year of between 1% and 3%."
In equity markets, Associated British Foods tumbled as it cut its profit outlook due to a weaker performances at its Primark retail chain and US foods operations in the 16 weeks to 3 January. The conglomerate said Primark's sales growth in the period was below previous expectations and it now expected sales growth in the first half of 2026 to be in the low single digits.
"We now expect group adjusted operating profit and adjusted EPS to be below last year," AB Foods said.
Tesco slumped as it said full-year earnings were expected to be at the top end of forecasts but reported a slowdown in underlying sales growth over the key Christmas selling season.
Sainsbury's, which is due to update the market on Friday, also fell.
Greggs lost ground as the bakery chain posted a rise in fourth-quarter sales but said it expects flat profits this year amid subdued consumer confidence.
Experian fell as it said chairman Mike Rogers was planning to retire at the annual meeting in July 2026, after nine years on the board.
On the upside, defence stocks surged after Donald Trump said US defence spending should be boosted to $1.5tn in 2027 - a 50% increase from this year's budget - in "these very troubled and dangerous times". This follows his capture of Venezuelan leader Nicolas Maduro at the weekend.
BAE Systems, Babcock, Rolls-Royce and Chemring all shot higher.
Marks & Spencer rose as it left its full-year guidance unchanged after what it called "solid" Christmas trading.
Computacenter rallied as it announced the acquisition of AgreeYa, a professional services business focused on the US enterprise market and the assets of the associated business, AgreeYa India, for up to $120m.
Market Movers
FTSE 100 (UKX) 10,028.61 -0.20%
FTSE 250 (MCX) 22,847.02 -0.15%
techMARK (TASX) 5,862.84 0.61%
FTSE 100 - Risers
BAE Systems (BA.) 2,053.00p 6.59%
Marks & Spencer Group (MKS) 337.70p 2.80%
Babcock International Group (BAB) 1,474.00p 2.29%
Rolls-Royce Holdings (RR.) 1,276.50p 1.39%
Berkeley Group Holdings (The) (BKG) 4,052.00p 1.15%
Pershing Square Holdings Ltd NPV (PSH) 4,648.00p 0.96%
Diageo (DGE) 1,591.50p 0.92%
Aviva (AV.) 685.20p 0.91%
Persimmon (PSN) 1,403.00p 0.83%
easyJet (EZJ) 508.60p 0.79%
FTSE 100 - Fallers
Associated British Foods (ABF) 1,919.50p -10.76%
Tesco (TSCO) 431.30p -4.71%
Sainsbury (J) (SBRY) 325.40p -3.33%
Antofagasta (ANTO) 3,310.00p -2.27%
3i Group (III) 3,117.00p -2.01%
ICG (ICG) 2,058.00p -2.00%
Burberry Group (BRBY) 1,315.00p -1.83%
Ashtead Group (AHT) 5,378.00p -1.75%
Shell (SHEL) 2,609.50p -1.73%
Mondi (MNDI) 900.20p -1.68%
FTSE 250 - Risers
Chemring Group (CHG) 523.00p 3.77%
Computacenter (CCC) 3,198.00p 3.63%
Softcat (SCT) 1,450.00p 3.57%
Trustpilot Group (TRST) 181.60p 2.19%
Rank Group (RNK) 99.70p 1.84%
Mitchells & Butlers (MAB) 272.50p 1.49%
RHI Magnesita N.V. (DI) (RHIM) 2,775.00p 1.46%
Bytes Technology Group (BYIT) 369.80p 1.43%
Kainos Group (KNOS) 1,023.00p 1.39%
Safestore Holdings (SAFE) 787.00p 1.35%
FTSE 250 - Fallers
Hays (HAS) 52.00p -4.76%
Moonpig Group (MOON) 198.20p -4.71%
Pagegroup (PAGE) 230.60p -3.76%
Greggs (GRG) 1,720.00p -2.99%
Diversified Energy Company (DI) (DEC) 989.00p -2.47%
Workspace Group (WKP) 398.50p -1.97%
Quilter (QLT) 183.10p -1.93%
XPS Pensions Group (XPS) 332.50p -1.92%
Mitie Group (MTO) 168.60p -1.75%
WPP (WPP) 334.50p -1.68%
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