BAE leads defence surge after Norway unveils £10bn deal to buy UK-built submarine-hunting warships

Defence stocks rose yesterday after a major warship deal was announced and Europe stepped up planning for military deployments in Ukraine.

FTSE 100-listed BAE Systems gained 1.9 per cent, or 33.5p, to 1791p after Norway unveiled a £10billion agreement to buy submarine-hunting Type 26 frigates made by the firm at its Glasgow shipyard.

And Babcock, which makes ships and nuclear submarines for the Royal Navy, rose by 2.1 per cent, or 21p to 1037p, while Rolls-Royce advanced 2.8 per cent, or 30p, to 1100p.

Germany’s Rheinmetall, up 3.5 per cent, and Italy’s Leonardo, climbing 4.5 per cent, were also among the winners. Defence firms have gained strongly since Vladimir Putin’s tanks rolled into Ukraine in 2022, with BAE’s value rising three-fold.

The firms were given a further boost yesterday after European Commission president Ursula von der Leyen told the Financial Times that European capitals were making ‘pretty precise plans’ for potential deployments to Ukraine as part of any post-war security guarantees.

Russ Mould, at broker AJ Bell, said Norway’s warship deal was ‘tangible evidence of how the increased appetite among European countries to spend on their military capabilities could benefit the likes of BAE’.