FTSE 100 ends down as defence stocks offset commodity gains

Easter food spending lifts UK retail sales in March

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BP expects rise in Q1 upstream energy output, shares up

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FTSE 100 down 0.1%, FTSE 250 off 0.5%

April 9 (Reuters) - Britain's blue-chip share index closed lower on Tuesday after defence stocks succumbed to a bout of profit-taking and offset gains in mining and oil shares that were lifted by stronger commodity prices.

The FTSE 100 index of top British firms slipped 0.1%, with defence company BAE Systems, aerospace supplier Melrose and engine maker Rolls-Royce dragging the benchmark down with losses in the range of 3.2% and 4.5%.

Following strong performance in recent years, defence stocks across Europe tumbled after Goldman Sachs said that valuations in the sector likely presented more downside than upside risk going into 2025.

Investors were also cautious ahead of U.S. inflation data, the European Central Bank's monetary policy decision and UK GDP data this week that could set the tone for the pace of monetary policy easing across regions this year.

"With relatively limited corporate news to change the tide, investors are more concerned with macro events this week," said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

Investors are closely watching market bets on the Bank of England (BoE) and the Federal Reserve policy paths. Markets have priced in 67 basis points of interest rate cuts by the BoE in 2024.

An early Easter boosted food spending in Britain last month, lifting retail sales by the most since August, but the broader picture remained subdued as wet weather dampened demand for other goods, the British Retail Consortium said.

The domestic-focused FTSE 250 index slipped 0.5%.

Commodity-linked sectors extended recent gains. The FTSE 350 precious metal miners index climbed 2.8% to its highest since July 2023 as gold prices touched record highs.

Industrial metal miners rose 1.4% as iron ore futures prices continued to gain on hopes of improving demand for the key steel-making ingredient in top consumer China. Copper prices steadied near 14-month highs.

Oil stocks were led higher by a 1.3% gain in BP after the energy giant forecast first-quarter upstream production of oil and gas as well as low-carbon energy to be higher than the previous three months. (Reporting by Pranav Kashyap, Khushi Singh and Sruthi Shankar in Bengaluru; Editing by Eileen Soreng, Varun H K and Emelia Sithole-Matarise)