Sector movers: BAE, Rolls-Royce lead aero/defence sector higher

LONDON (ShareCast) - Aerospace and defence stocks were among the best performers on Tuesday afternoon with gains from sector giants BAE Systems (LSE: BA.L - news) and Rolls-Royce providing a lift.

BAE's share price was boosted on the news that South Korea has reopened an $8bn tender to upgrade its ageing air force.

Seoul is looking for a fleet of 60 new jets and Boeing (NYSE: BA - news) 's F-15SE was thought to have been the firm favourite given that it was the only model that came in under the government's 8.3tn-won ($7.7bn) budget.

However, the Defense Ministry announced on Tuesday that it would open the contract to new bids, raising hopes for the Eurofighter (made by partners BAE and EADS (Paris: NL0000235190 - news) ) and Lockheed Martin's F-35.

Speaking after the decision, Defense Ministry spokesman Kim Min Seok said: "South Korea needs measures for retaliation against North Korean provocation [...] South Korea needs to secure military capability in line with recent aviation technology developments."

Power systems group Rolls-Royce meanwhile was heading higher after Jefferies raised its target price for the stock from 1,250p to 1,400p and kept a 'buy' rating as it expressed optimism with 'TotalCare' - the maintenance and repair services part of the Civil Aerospace division.

While there were some concerns with TotalCare-related cash outflows in the first half, the broker said things will "materially improve" from 2015/2016 onwards in response to strong revenue growth.

"As time passes, we have deduced and discovered more about TotalCare to a point where we see it as an opportunity rather than as a risk or threat," Jefferies said.

Elsewhere in the sector, Meggitt, Cobham (LSE: COB.L - news) , Chemring, Ultra Electronics (Other OTC: UEHPY - news) , QinetiQ and Senior were also making gains.

Top (Taiwan OTC: 8419.TWO - news) performing sectors so far today
Forestry & Paper 11,568.44 +1.42%
Aerospace and Defence 5,162.64 +1.32%
Technology Hardware & Equipment 1,172.52 +1.26%
General Retailers 2,711.61 +1.23%
Electricity 10,093.51 +1.11%

Bottom performing sectors so far today
Food Producers & Processors 6,919.71 -1.18%
Tobacco 36,837.24 -0.70%
Health Care Equipment & Services 4,313.29 -0.68%
Automobiles & Parts 8,180.89 -0.60%
Industrial Metals & Mining 1,557.20 -0.57%



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