London midday: FTSE extends gains as defence firms, Next jump
By Michele Maatouk
Date: Tuesday 06 Jan 2026
(Sharecast News) - London stocks had extended gains by midday on Tuesday, underpinned once again by strength in the defence sector, while a guidance upgrade from Next also provided a boost.
The FTSE 100 was up 0.7% at 10,077.41, reaching fresh highs after closing above the milestone 10,000 mark on Monday for the first time.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Global equities are starting the day on the front foot, with markets largely brushing aside the uncertainty stirred up by US moves in Venezuela."
A survey out earlier showed that business activity across the UK's dominant service sector ticked only modestly higher in December, missing expectations.
The S&P Global UK services PMI business activity index came in at 51.4 last month, up only fractionally on November's 51.3. It was also lower than S&P Global's earlier flash estimate and consensus, both for 52.1.
Respondents pointed to "challenging" business conditions, including constrained client spending and the subdued economic prospects for the UK. As a result, the PMI composite output index nudged up just 0.2 points to 51.4, also below consensus for 52.1.
The composite index is a weighted average of the manufacturing output and services indices.
Tim Moore, economics director at S&P Global Market Intelligence, said: "Lacklustre business activity growth continued across the UK service sector at the end of 2025.
"The most positive development was a renewed upturn in new business intakes, following a slight decline during November. Order books were also supported by a marginal rebound in export sales.
"However, survey respondents still noted sales headwinds linked to weak UK economic prospects alongside challenging operation conditions.
"Meanwhile, inflationary pressures across the service economy strengthened at the end of the year; input prices rose to the greatest extent for seven months."
Earlier, data from the British Retail Consortium showed that shop price inflation edged higher in December as food price growth accelerated strongly.
In equity markets, defence firms were on the rise again, having rallied on Monday after the US capture over the weekend of Venezuelan leader Maduro. Babcock, Rolls-Royce, BAE Systems and QinetiQ all gained as investors also considered US President Trump's plans for Greenland, Cuba, Colombia and Mexico.
High street retailer Next was among the top performers as it lifted full-year guidance on the back of better-than-expected festive trading.
It now expects total group sales in the year to 31 January to come in at £6.97bn and pre-tax profits of £1.15m. Next had previously guided for annual sales of £6.87bn and pre-tax profits of £1.14bn.
Primark owner AB Foods also rose, while supermarket retailers Sainsbury's and Tesco were higher ahead of trading statements on Thursday and Friday, respectively.
The gains also came as the latest industry data from Worldpanel showed that supermarket sales rallied in December as shoppers sought out bargains and grocery inflation moderated.
Rentokil jumped on the back of an upgrade to 'overweight' from 'equalweight' at Morgan Stanley, but DCC slumped after a downgrade to 'equalweight' by the same outfit.
Insurance and investment giant Prudential advanced as it announced the launch of a $1.2bn share buyback programme.
Rank Group rose after the Mecca Bingo owner said chief executive John O'Reilly had decided to retire on 29 January and will be replaced on an interim basis by chief financial officer Richard Harris.
Ocado surged after JPMorgan placed the shares on 'positive catalyst watch' as it pointed to improving fundamentals and said it expects a strong message on free cash flow at the full-year results in February.
Diageo fizzed higher after RBC Capital Markets upgraded the drinks maker to 'outperform' from 'sector perform'.
On the downside, JD Sports tumbled as Bank of America downgraded the stock to 'neutral' from 'buy' and cut the price target to 96p from 112p.
Upper Crust owner SSP slumped after a downgrade to 'equalweight' at Barclays following a recent rally in the shares.
Market Movers
FTSE 100 (UKX) 10,077.41 0.73%
FTSE 250 (MCX) 22,595.83 0.01%
techMARK (TASX) 5,704.35 0.56%
FTSE 100 - Risers
Babcock International Group (BAB) 1,395.00p 3.56%
Next (NXT) 14,070.00p 3.53%
Rentokil Initial (RTO) 459.00p 3.12%
Tesco (TSCO) 453.30p 2.42%
Rolls-Royce Holdings (RR.) 1,261.00p 2.40%
Sainsbury (J) (SBRY) 335.80p 2.38%
Airtel Africa (AAF) 372.00p 2.14%
BAE Systems (BA.) 1,887.50p 1.97%
GSK (GSK) 1,854.50p 1.87%
United Utilities Group (UU.) 1,219.00p 1.58%
FTSE 100 - Fallers
JD Sports Fashion (JD.) 82.38p -5.74%
DCC (CDI) (DCC) 4,304.00p -2.71%
Spirax Group (SPX) 6,675.00p -2.63%
Metlen Energy & Metals (MTLN) 44.00p -2.44%
Croda International (CRDA) 2,666.00p -2.27%
Schroders (SDR) 410.80p -2.05%
Entain (ENT) 762.00p -2.03%
Auto Trader Group (AUTO) 576.40p -1.44%
Mondi (MNDI) 898.60p -1.38%
Rightmove (RMV) 508.20p -1.28%
FTSE 250 - Risers
Ocado Group (OCDO) 254.10p 7.44%
Man Group (EMG) 246.60p 5.84%
QinetiQ Group (QQ.) 472.80p 3.50%
Patria Private Equity Trust (PPET) 634.00p 3.26%
Pan African Resources (PAF) 123.60p 3.00%
Diversified Energy Company (DI) (DEC) 1,060.00p 2.91%
CMC Markets (CMCX) 319.50p 2.57%
Paragon Banking Group (PAG) 885.50p 2.55%
Oxford Biomedica (OXB) 678.00p 2.26%
AEP Plantations (AEP) 1,420.00p 2.16%
FTSE 250 - Fallers
Ceres Power Holdings (CWR) 229.60p -4.25%
SSP Group (SSPG) 194.40p -3.76%
Abrdn (ABDN) 206.20p -2.83%
Ashmore Group (ASHM) 182.00p -2.67%
W.A.G Payment Solutions (EWG) 113.00p -2.59%
Playtech (PTEC) 264.50p -2.58%
Watches of Switzerland Group (WOSG) 454.60p -2.45%
Greggs (GRG) 1,715.00p -2.39%
B&M European Value Retail S.A. (DI) (BME) 161.20p -2.33%
Marshalls (MSLH) 176.60p -2.32%
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