London’s FTSE 100 index closed lower on Tuesday, with declines in major energy and defence stocks weighing on the benchmark as market sentiment remained cautious amidst weaker UK labour data and shifting macroeconomic expectations.

The FTSE 100 slipped about 0.3 per cent by the end of trading to around 9,684.79, reversing a stronger session the day before as investors reassessed prospects for interest rate policy and global growth.

Energy shares led losses, tracking a fall in oil prices and broader commodity weakness.

Major oil exporters including BP and Shell saw notable declines, with BP shares down sharply and Shell also underperforming the wider market.

The energy sector’s retreat reflected investor caution about demand durability in the face of tepid economic indicators.

Defence stocks also contributed to the evening’s downturn.

Aerospace and defence firms such as BAE Systems and other large equipment manufacturers recorded share price falls of more than one per cent, reflecting reduced sector momentum amid expectations of a potential de-escalation in geopolitical tensions and slowing global military spending growth.

Market participants also digested fresh UK employment figures showing a rise in unemployment and moderating wage growth, data that has strengthened expectations that the Bank of England may cut interest rates in the near future to support economic activity.

These developments have intensified scrutiny of policymakers’ next moves as investors navigate a complex backdrop of slowing labour markets and persistent inflation concerns.

Despite the overall weakness, some sectors bucked the trend.

Select financial and materials stocks posted modest gains, with precious metals and mining names outperforming, while travel-related shares edged higher.

The broader European market also experienced patchy performance, with defence and energy shares under pressure ahead of upcoming central bank decisions in both the UK and the United States.