1323 GMT - The EU-U.K. deal signed Monday, which includes a defense and security pact, is a "clear win" for the U.K. defense industry and broader EU military capability goals, Loredana Muharremi, equity analyst at Morningstar, says. This is because it paves the way for U.K. defense companies such as BAE Systems and Rolls-Royce to benefit from the EU's planned loans-for-arms mechanism, worth 150 billion euros. EU member states would be able to borrow from the EU to finance purchases of defense equipment from participating companies. But Muharremi says the fund is "too small and structurally constrained to meet Europe's defense ambitions." High-debt countries like France, Italy and Spain might not want to take on extra debt, she warns. QinetiQ is up 0.5%, while BAE Systems shares are flat, Rolls-Royce is down 0.4% and Babcock International is down 0.35%. (cristina.gallardo@wsj.com)

(END) Dow Jones Newswires

May 19, 2025 09:24 ET (13:24 GMT)

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