The Italian shipbuilder Fincantieri will join Italy's blue chip stock index, FTSE MIB, for the first month next year, traders reported on Thursday. This move would strengthen the influence of defence amid a global rally fueled by geopolitical tensions.

The stock will likely replace utility Hera and medical diagnostics group DiaSorin. These two companies are currently among the 40 blue-chip index members with the lowest weight.

Every three months, the FTSE MIB is re-evaluated based on the market capitalisation and liquidity of the companies.

The deadline for the calculations related to index updates will expire on Monday, November 24. Fincantieri represents a potential weight in index of 0.3%. DiaSorin has fallen to 0.20%, and Hera to 0.5%.

One trader said that Hera's stock price is much lower than DiaSorin, and this could be important if you count the next three trading sessions. Interpump leaving the index is a less likely scenario.

Only FTSE Russell, the index compiler, can determine the number of shares to be used and the free float.

Fincantieri shares, which are expanding their military business, have risen by about 170% this year. They reached a record of 26,92 euros on October 9 before falling to 18,72 euros. They began the year at 6.9 euro.

The conflicts in Ukraine, Gaza and their links to technology have boosted defence stocks globally. Leonardo's stock has gained around 90% this year. (Reporting and editing by Keith Weir, Giancarlo Navach)

(source: Reuters)