U.K. defense stocks jumped following the appointment of John Healey as the country's new finance chief, as investors bet the former defense secretary will oversee an increase in the department's spending.

Babcock International, which builds ships for the U.K. navy and helps manage the military's nuclear, air and vehicle assets, led London's FTSE 100 index in late morning trade Tuesday. Shares rose 6.8% to 11.08 pounds.

BAE Systems stock rose 3.3%, while engine maker Rolls-Royce climbed 1.9%. Defense technology group QinetiQ, which was spun out of the U.K.'s Ministry of Defence in 2001, gained 4.1%.

"We think it is very likely that Mr. Healey will now seek to boost U.K. Defence spending," J.P. Morgan analysts wrote in a note to clients.

In June, Healey resigned from his role as defense secretary under former prime minister Keir Starmer in protest over what he said was the government's failure to materially increase military spending.

In his resignation letter, Healey called for the U.K. to spend 3% of gross domestic product in 2030. The U.K. currently expects to spend 2.7% of GDP on defense by the end of the decade.

Like other North Atlantic Treaty Organization countries, the U.K. has pledged to spend 3.5% of gross domestic product on its armed forces by 2035.

Healey's appointment by new Prime Minister Andy Burnham also helped buoy defense companies elsewhere in Europe. Shares in France's Thales and Italian group Leonardo--which each attribute between 10% and 15% of their sales to the U.K., according to Citi analysts--rose by 1.7% and 3.8%, respectively.

Write to Joe Stonor at josephmichael.stonor@wsj.com

(END) Dow Jones Newswires

July 21, 2026 05:48 ET (09:48 GMT)

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