BAE Systems was among the best of the FTSE 100 risers after it won a £3.95 billion contract from the Ministry of Defence for the next phase of the UK's nuclear-powered attack submarine programme.
Broker Berenberg added to the positive mood by upgrading the company to 'buy' from 'hold'.
The contract is for the UK's next-generation submarine programme, known as SSN-AUKUS and follows the AUKUS announcement in March by the leaders of Australia, the UK and the US.
BAE said the £3.95 billion funding will cover development work to 2028, enabling it to move into the detailed design phase of the programme and begin to procure long-lead items.
Manufacture will start towards the end of the decade with the first SSN-AUKUS boat due to be delivered in the late 2030s, BAE said.
Chief executive Charles Woodburn said: “We’re incredibly proud of our role in the delivery of this vitally important, tri-nation submarine programme.”
“This funding reinforces the government’s support to our UK submarine enterprise and allows us to mature the design, and invest in critical skills and infrastructure to support our long-term national security.”
Shares in BAE rose by 1.6% to 1,014p.