Rolls-Royce Holdings PLC (LSE:RR.) and Melrose Industries PLC (LSE:MRO, OTC:MLSPF) shares climbed on Monday as hopes of a diplomatic breakthrough between the US and Iran lifted the aerospace and defence sector.
Rolls climbed 4%, while Melrose rose 3.9%. Babcock International PLC (LSE:BAB) gained 2.4% and BAE Systems PLC (LSE:BA.) added 0.9%.
Sentiment improved after Donald Trump said over the weekend that planned US strikes against Iran had been cancelled and fresh talks would begin on Monday.
The US president said he held off at the urging of Gulf allies including Saudi Arabia, Qatar and the United Arab Emirates.
Trump said a possible agreement would include the immediate reopening of the Strait of Hormuz and an end to Iran's nuclear threat.
Separately, Iranian officials said negotiations with Oman over a new shipping route through the strait were approaching their final stages.
Brent crude tumbled 4.9% to $83.62 a barrel as the prospect of a diplomatic deal reduced fears of further disruption to energy supplies and global trade.
The decline in oil prices offered further support to aviation-related companies. Rolls-Royce makes aircraft engines and Melrose owns aerospace supplier GKN Aerospace.
