BAE Systems PLC (LSE:BA.)s was among a handful of FTSE 100 gainers on a bruising day for UK stocks, which saw the blue-chip index drop 144 points, or 1.5%.
Britain's largest defence contractor climbed after announcing a partnership with Boeing and Saab to develop a successor to the country's ageing Hawk training aircraft.
The trio have signed a letter of intent to work together on a design based on Boeing and Saab's T-7 jet, which the pair developed for the US Air Force. Final assembly would take place in Britain under the proposals.
The move follows the government's announcement in June that it needed to replace its out-of-production Hawk fleet, used by the Red Arrows aerobatic team, with ministers saying they would welcome bids from UK-based suppliers.
A competitive tender process is expected to launch shortly.
Simon Barnes, managing director of BAE's Air sector, said the collaboration would allow the group to present "a compelling offer" to the Royal Air Force and international customers. He noted that a future aircraft could appeal to existing BAE clients, including Saudi Arabia and Oman.