London's FTSE 100 falls in thin trading after best week in December

(Reuters) - London's FTSE 100 dipped on Monday, after logging its best week in five on Friday, with aerospace and defence stocks leading the broader market declines.

The blue-chip FTSE 100 was down 0.2%, while the mid-cap FTSE 250 lost 0.3%.

The FTSE 100 is set for its fourth straight year of gains, while the FTSE 250 is on track for its second consecutive yearly rise.

Aerospace and defence stocks were down 0.6% on the day. Precious metal miners also fell 0.6%, as gold prices slipped. [GOL/]

Home construction and household goods stocks, however, were up 0.5%.

Trading volumes are expected to be thin in a holiday-truncated week. UK markets will close early on Tuesday and remain shut on Wednesday for the New Year.

Investors are bracing for uncertainty in 2025 as Donald Trump is set to return to the White House with his potential tariff policies. Besides, domestic businesses are assessing the impact of UK Finance Minister Rachel Reeves' October budget announcement.

Any clues on the Bank of England's monetary policy trajectory will also be on the radar, after the British central bank suggested it would "stick" to its gradual approach to reductions on the back of sticky inflation in the economy.

The BoE delivered two interest rate cuts in 2024, totalling a reduction of 50 basis points. Money market participants are now pricing in more than 52 bps in cuts in 2025.

(Reporting by Purvi Agarwal in Bengaluru; Editing by Shilpi Majumdar)