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Last Updated: Wednesday, 23 January 2008, 16:56 GMT
General Dynamics profit goes up
A US Army Abrams tank in Iraq
General Dynamics is one of the top US defence firms
US military contractor General Dynamics has reported a 42% rise in quarterly profit on record US defence spending and strong demand for its private jets.

The maker of Abrams tanks, Stryker combat vehicles and Gulfstream jets, said its net profit was $579m (297m) in the last three months of 2007.

Sales rose 15% to $7.52bn, benefiting from demand for equipment to supply troops in Afghanistan and Iraq.

However, some analysts questioned whether defence earnings have peaked.

They pointed to the fact that there may be a possible change in defence policy under a new US president.

Calls to reduce the number of US troops in Iraq could lead to weaker demand for military equipment, they said.

General Dynamics, one of the sector leaders in the US, is the first major military contractor to report its results this year.

Shares in the defence sector have been performing well as many people see it as a safer investment, a so called "safe haven", during times of economic turmoil.

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