London's FTSE 100 falls as GSK slides after Nuvalent deal

The UK's benchmark FTSE 100 index moved lower on Tuesday, pressured by losses in healthcare giant GSK after the company announced plans to acquire shares of US-based drug developer Nuvalent in a deal valued at $10.6 billion.

By 0810 GMT, the blue-chip FTSE 100 had slipped 0.3% to 10,341 points.

In contrast, the mid-cap FTSE 250 index edged 0.2% higher, reflecting a mixed performance across the broader UK equity market.

GSK leads the healthcare sector lower

GSK shares fell 2.8% following the acquisition announcement, making the stock one of the biggest drags on the benchmark index.

The decline also weighed heavily on the broader FTSE 350 Pharmaceuticals and Biotechnology index, which dropped 1.6% and emerged as the worst-performing sector of the day.

The proposed acquisition forms part of GSK's efforts to strengthen its position in lung cancer treatments, though investors appeared cautious about the transaction's implications.

Markets monitor Middle East developments

Investor sentiment was also influenced by geopolitical developments in the Middle East.

Global markets focused on signs of de-escalation after Iran and Israel said they had halted attacks on one another following an appeal from US President Donald Trump.

Trump also stated that he could have "an idea" for an Iran deal within a few days.

Despite the apparent easing of tensions, concerns over inflation remained in focus.

Higher energy costs linked to the conflict have contributed to expectations that the Bank of England could raise interest rates by 25 basis points in September, according to data compiled by LSEG.

UK pushes ahead with AI investment

The UK's main stock indexes have lagged peers in Asia and the United States, partly due to their relatively limited exposure to artificial intelligence-related companies.

Against that backdrop, Britain outlined a new £1.1 billion ($1.47 billion) initiative aimed at expanding domestic AI computing capacity.

The announcement comes as policymakers seek to strengthen the country's technological infrastructure and improve competitiveness in the rapidly evolving AI sector.

BP declines as crude prices ease

Among individual stocks, BP fell 1%, tracking weaker crude oil prices.

Investor attention on the energy major has intensified following the departure of former chairman Albert Manifold.

A recent report indicated that investors and former executives remained unclear about the precise circumstances surrounding his exit.

Molten ventures and Fever-Tree advance

Elsewhere, venture capital firm Molten Ventures gained 9.5% after reporting its annual results.

Fever-Tree Drinks rose 6.4% after the carbonated mixer supplier expressed confidence in meeting full-year market expectations for revenue and core profit.

The company also announced an increase in its share buyback programme.

Meanwhile, homebuilder MJ Gleeson fell 3.5%.

The British pound strengthened against the US dollar, with GBP/USD recovering above 1.3350 after touching a three-week low.

Construction firms face the sharpest cost inflation on record

Separate data highlighted mounting challenges within the UK's construction sector.

According to a survey released by S&P Global, British construction firms experienced the sharpest month-on-month increase in cost inflation since records began in 1997.

The Construction Purchasing Managers' Index measure of input cost inflation rose to 70.5 in March from 59.5 in February.

The reading marked the highest level since November 2022 and underscored growing cost pressures across the industry.

The increase follows similar trends in other sectors.

British manufacturers reported their steepest monthly rise in cost burdens since October 1992, only a week earlier.

Demand weakens despite a slight improvement in PMI

The construction sector also faced weakening demand conditions.

New orders declined at the fastest pace since November last year, reflecting softer business activity and reduced client demand.

At the same time, earlier optimism regarding future output faded, suggesting a more cautious outlook among firms.

S&P Global's headline construction PMI remained below the 50.0 level that separates expansion from contraction for the fifteenth consecutive month.

However, the index improved slightly to 45.6 in March from 44.5 in February, indicating that the pace of contraction moderated somewhat.

Official data provided a mixed picture of the sector. Construction output increased 0.2% in January after contracting 2% during the final quarter of 2025.

While the rise suggested some stabilisation, it was insufficient to offset the broader challenges posed by weakening demand and escalating costs.