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Defence stocks gain as India looks to boost defence spending
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Homebuilders fall on Deutsche Bank downgrade
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FTSE 100 up 0.8%, FTSE 250 adds 0.5%
Feb 13 (Reuters) - Britain's FTSE 100 edged higher on Monday, supported by gains in defence stocks, while investors awaited U.S. inflation data due later in the week that could offer clues on the future monetary tightening path.
The blue-chip FTSE 100 rose 0.8% to 7,947.60, hitting its record closing high, and hovered close to an all-time high of 7,949.57 briefly hit last week.
The domestically focused FTSE 250 midcaps rose 0.5%.
"These are just the normal ebbs and flows of market dynamics and we're waiting for the next catalyst from the U.S. CPI print tomorrow," said Giles Coghlan, chief market analyst at HYCM.
Rolls-Royce and BAE Systems climbed 1.8% and 1.6% respectively, taking the aerospace and defence sector 1.6% higher.
Stocks in the sector gained after Indian Prime Minister Narendra Modi said the country wants to more than triple annual defence exports to $5 billion by 2024/25.
The centrepiece event for the week is the release of U.S. CPI data on Tuesday. UK inflation data will be released later this week.
Russ Mould, investment director at AJ Bell, said the narrative around potential interest rate cuts towards the end of the year took a hit last week.
"On the short term, these inflation figures will go a long way to testing the market's confidence in that narrative that's done so much to boost risk appetite."
Among stocks, industrial technology firm Smiths and engineering firm Weir Group rose 1.7% and 1.9% respectively, after Goldman Sachs initiated coverage on both with a "buy" rating.
British homebuilders Crest Nicholson, Taylor Wimpey , Persimmon and Barratt Developments fell between 2.6% and 5.2% after Deutsche Bank downgraded the stocks. (Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Sherry Jacob-Phillips, Saumyadeb Chakrabarty and Alison Williams)
