FTSE slips as defence and mining stocks drag UK markets

UK equities came under pressure as weakness across consumer staples, defence and mining stocks weighed on market sentiment.

Investors also assessed fresh economic data showing a slowdown in mortgage lending and broader credit growth, pointing to softer borrowing activity in May.

Both the FTSE 100, which is dominated by internationally focused companies, and the more domestically oriented FTSE 250 had already ended the previous week lower.

Consumer staples lead declines

Consumer staple shares weighed on the FTSE 100 after British American Tobacco fell 1.6%.

The decline followed the tobacco company's announcement that it plans to reduce its workforce by 20%.

The move added pressure to the broader consumer staples sector, making it one of the weakest performers during the session.

Defence stocks under pressure

Aerospace and defence shares also traded lower after the UK Ministry of Defence announced changes to its naval strategy.

BAE Systems declined 1.4%, while Babcock dropped 7%.

The ministry said on Sunday that the UK would scrap plans to replace its ageing destroyers and instead focus on developing drone warships.

The announcement weighed on investor sentiment across the defence sector.

Mining stocks fall as gold weakens

Mining companies also traded lower as gold prices declined.

The fall in the precious metal came after the recent escalation in the Middle East fuelled inflation concerns, adding pressure to mining shares during the session.

Energy and Financial stocks limit losses

Losses in the broader market were partially offset by gains in energy and financial stocks.

These sectors helped cushion the decline in the benchmark index, although they were not enough to reverse the overall negative market trend.

Meanwhile, BT traded marginally higher after announcing a new strategic partnership with Verizon.

The two telecommunications companies said they would combine their international enterprise operations into a 50:50 joint venture.

In the political arena, investors awaited Labour lawmaker Burnham's speech for indications on fiscal policy and broader economic priorities.

Market participants also monitored fresh economic data that pointed to weakening business confidence.

Mortgage approvals drop sharply in May

On Monday, data released by the Bank of England showed a notable slowdown in housing activity.

The central bank said lenders approved 56,205 mortgages for house purchases in May, the lowest monthly total since December 2023.

The figure marked a sharp decline from the 66,034 approvals recorded in April.

The latest data also indicated a broader slowdown in mortgage lending, business borrowing, and private sector credit growth during the month.

The weaker lending figures suggested softer borrowing activity across households and businesses, adding to concerns over the pace of economic growth.

The combination of sector-specific weakness, slowing credit growth, and cautious investor sentiment kept pressure on UK equities as markets continued to assess the domestic economic outlook.