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Defence shares rise on government's forces plan

Strategic Defence and Security Review is set to include extra £12bn of spending

Cameron is pushing for Britain to join action against Islamic militants in Syria

Shares in defence companies were on the up on Monday as the British government prepared to outline its flagship defence review.

The stock of companies such as BAE Systems (LON:BA.), Cobham (LON:COB) and QinetiQ (LON:QQ.) gained 6.6p to 498.6p, 1.2p to 293p and 1.7p to 262.5p respectively.

Shares in Rolls-Royce (LON:RR.) also rose 14p, or 2.5%, to 566p on talk that it was planning 2,000 job cuts as part of a bid to revive its flagging business.  

Prime Minister David Cameron is likely to say the focus of UK defence policy going forward is to combat state-based threats and terrorism, including the so-called Islamic State.

Cameron was in Paris on Monday morning for talks with French President Francois Hollande following the atrocities in the French capital earlier this month.

He said Britain should be joining France and the US in fighting IS and is set to try to persuade UK lawmakers this week to back air-strikes against IS targets in Syria.

But ministers have said they do not plan to hold a vote on the matter until they can be certain of winning, following an earlier vote in which Cameron was defeated.

The Strategic Defence and Security Review will outline an extra £12bn of spending on equipment such as a new fleet of marine patrol aircraft.

It is likely to include plans to create two 5,000-strong "strike brigades" by 2025 that the UK can rapidly deploy to help it respond to "diverse" threats.

There will be nine new Boeing P8 maritime patrol aircraft, making up for a decision in the last review in 2010 to axe a new generation of Nimrod aircraft

The review is also set to include a 10-year life extension for some of the RAF's fighter jets to 2040 and work to give them ground attack capabilities, in effect adding two more frontline squadrons to the air force.

Defence secretary Michael Fallon told the BBC the government had decided to spend more on defence than on welfare.

He added: "We're faced with a threat we didn't see five years ago so we have to gear up and make sure our armed forces have the equipment and configuration they need."

The BBC quoted Labour shadow defence minister Maria Eagle as saying she was glad to see the government was going to "put straight the botched decisions made five years ago" and make sure the UK was able to patrol its own seas.

Meanwhile, Brussels remained in shutdown mode on Monday, with universities, schools and the metro shut, as police hunt for the prime suspect in the Paris attacks.

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