British equities started the week on a weaker note on Monday as defence firms lost ground after an aborted mutiny by mercenaries in Russia, while shares of carmaker Aston Martin surged after an agreement with a U.S. electric vehicle maker.

The blue-chip FTSE 100 slipped 0.4%, hitting a three month low as the aerospace and defence sector lost 2.1% after fighters of the Wagner group attempted a mutiny in Russia over the weekend.

"Defence stocks tend to benefit from bad news in terms of geopolitical tensions," said Christopher Peters, trading floor manager at Accendo Markets.

Britain's biggest defence company BAE Systems slumped 3.1%, dropping to the bottom of the FTSE 100.

The more domestically-focussed FTSE 250 midcap index also fell 0.5%, touching a three-month low.

Lloyds fell 1.9% after JP Morgan downgraded the stock to "underweight" from "neutral" rating. The broader banking index was down 1.1%.

In a bright spot, Aston Martin jumped 10.1% after the luxury carmaker said it would enter into a strategic supply agreement with U.S.-based Lucid Group to make electric vehicles.

Industrial metal miners gained 0.6% tracking higher copper prices.

Heading into the last week of the quarter, the exporter-heavy FTSE 100 is on track to post quarterly losses after two straight quarters of gains, as surging domestic inflation and continued interest rate hikes by the Bank of England pressured equities.

Over the weekend, the world's central bank umbrella body, the Bank for International Settlements, called for more interest rate hikes, warning the world economy was now at a crucial point as countries struggle to rein in inflation.

Among individual stocks, Cineworld Group dropped 28.9% after the cinema chain operator said it will file for administration as part of a proposed restructuring plan. (Reporting by Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips)