Mining, defence stocks lift FTSE 100 at end of volatile week

Safe-haven gold above $3,000 for the first time

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UK to boost defence export lending by 2 billion pounds

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UK GDP falls unexpectedly in January

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FTSE 100 up 1.1%, FTSE 250 up 1.6%

March 14 (Reuters) - British stocks closed higher on Friday, driven by gains in defence and mining shares, ending a choppy week filled with uncertainty around U.S. tariffs.

The benchmark FTSE 100 gained 1.1%, set for its best day in over one month. However, it fell on the week, pressured by U.S. President Donald Trump's back and forth on U.S. tariffs, and downbeat quarterly earnings.

The midcap index gained 1.6% for the day, but closed its fourth straight week in the red.

Aerospace and defence stocks rose 3.8%, leading sectoral gains, after Britain announced a 2 billion pound boost in lending to other countries to buy British missiles and aircraft.

Sentiment also got a lift after German Chancellor-in-waiting Friedrich Merz secured crucial political backing to move forward with a massive increase in state borrowing, which is expected to include hefty defence spending.

Melrose Industries was the top FTSE 100 gainer, up 6.4%. Babcock International Group gained 4.3%, boosting the midcap index.

Separately, the precious and industrial metal miner sectors rose 1.8% and 2.3%, respectively, after spot gold prices popped above the key $3,000 mark for the first time in a historic safe-haven rally.

Meanwhile, Britain's economy unexpectedly contracted in January, with the gross domestic product falling 0.1% versus expectations of a 0.1% monthly expansion from economists polled by Reuters.

"Should President Trump continue ramping up tariffs, however, the chances of a UK soft patch in the middle of the year will rise, especially if the UK gets snared in the net of reciprocal tariffs," economists at Pantheon Macroeconomics wrote.

A Bank of England survey showed British long-term inflation expectations hit a five-year high in February.

British recruiter Hays gained 12.3%, marking its highest close since October 2024.

Next week, the U.S. Federal Reserve's policy decision will be in focus.