The UK's FTSE 100 started the year on a positive note, underpinned by aerospace and defence stocks on Tuesday, while investors looked ahead to economic data this week and its potential impact on the Bank of England's interest rate path.

The blue-chip FTSE 100 was up 0.3%, touching an over seven-month high earlier in the session, while the mid-cap FTSE 250 index was flat. The benchmark index lagged all of its European peers.

Aerospace and defence stocks hit a record high with a 1.3% jump, while automobiles and parts index climbed 0.8% to a three-month high.

Energy shares rose 0.6% after oil prices jumped 1% on potential Middle East supply disruptions and expectations of an economic stimulus from world's top crude importer China.

The British arm of supermarket chain Aldi reported an 8% rise in sales in the four-week period ended Dec. 24 to top 1.5 billion pounds ($1.91 billion) for the first time, while its smaller rival Lidl GB posted an even better 12% increase in the same period.

"The two supermarkets have intensified price competition in the UK, prompting other supermarkets to offer discounts and promotions and think of innovative ways to drive customer demand such as a renewed focus on their loyalty schemes," said Victoria Scholar, head of investment, interactive investor.

In other economic data, manufacturing and services activity and housing prices data will be on investors' radar through the week to assess the strength of the British economy, which might be in a recession.

Among individual movers, Marks and Spencer soared 2.2% after Exane BNP Paribas raised the retailer's stock rating to "outperform" from "neutral".

Shares of HSBC fell 0.4% as its subsidiary HSBC Continental Europe completed the sale of its retail banking business in France to Crédit Commercial de France.

BT Group slid 0.7% following a media report that the telecommunications and network provider's outgoing boss Philip Jansen has been approached for becoming the next chair of advertising group WPP, replacing Roberto Quarta.

(Reporting by Shubham Batra in Bengaluru; Editing by Sherry Jacob-Phillips)