Feb 13 (Reuters) - UK's FTSE 100 edged higher on Monday, supported by gains in defence stocks, while investors remained cautious ahead of U.S. inflation data that could offer clues on the future policy path.
The blue-chip FTSE 100 (.FTSE) gained 0.3%, hovering close to its record-high levels scaled last week, while the domestically focussed FTSE 250 midcaps (.FTMC) rose 0.1%.
Among early movers, Roll Royce (RR.L) and BAE Systems (BAES.L) climbed about 1% each, taking the aerospace and defence sector (.FTNMX502010) 0.8% higher.
Stocks in the sector gained after Indian Prime Minister Narendra Modi said the country wants to more than triple annual defence exports to $5 billion by 2024/25.
Industrial technology firm Smiths (SMIN.L) and engineering firm Weir Group (WEIR.L) rose 1.2% and 2.3%, respectively, after Goldman Sachs initiated coverage on both with a "buy" rating.
British homebuilders Crest Nicholson (CRST.L), Taylor Wimpey (TW.L), Persimmon (PSN.L) and Barratt Developments (BDEV.L) fell between 1% and 3% after Deutsche Bank downgraded the stocks.
The centrepiece event for the week is the release of U.S. CPI data on Tuesday. UK inflation data will be released later this week.
Russ Mould, investment director at AJ Bell, said the narrative around potential interest rate cuts towards the end of the year took a hit last week.
"On the short term, these inflation figures will go a long way to testing the market's confidence in that narrative that's done so much to boost risk appetite."
