Shares in Rolls-Royce Holdings PLC (LSE:RR.) fell over 6% on Monday along with smaller falls for BAE Systems PLC (LSE:BA.) and other contractors over concerns about UK defence spending.
This followed reports in weekend newspapers about apparent "belief" among defence officials that the Chancellor Rachel Reeves' autumn statement could see funding for various the Ministry of Defence projects cut.
Furthermore, defence investment was also highlighted via a speech by a former US National Security Advisor that was widely covered in the right-leaning press.
Robert C O'Brien backed calls for Labour to increase defence investment to 2.5% of national spending as "a terrific goal" that "has to be done quickly".
On top of that, former Tory defence minister Robert Webb also told Times Radio if the current defence secretary "doesn’t set out a timeline for 2.5% of GDP, he will leave us unprepared and our men and women of the Armed Forces unprotected".
A review of funding priorities for the MoD is due to be delivered next summer, based on the findings of a panel of experts.
Shares in Rolls fell over 6%, while Qinetiq PLC fell more than 3%, BAE dropped 2.8% and Babcock International PLC was down 2.3%.
Rolls was also hit by reports of an in-flight engine failure on a Cathay Pacific Airways flight soon after take-off.
Cathay said it was forced to cancel some flights because of a "precautionary" inspection of its long-haul Airbus A350 fleet after discovering engine issues.
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