FTSE 250 nears three-month high as US-Iran hopes lift UK stocks

UK equities moved higher on Tuesday, with the mid-cap FTSE 250 index touching a near three-month high, as investors returned from a long weekend and reacted to signs of progress in talks aimed at ending the conflict between the United States and Iran.

The blue-chip FTSE 100 index rose 0.6% to 10,533.50 points by 1020 GMT, reaching a one-month high during the session.

Meanwhile, the FTSE 250 index climbed 0.9% to its highest level since March 3 and remained on track for a fourth consecutive session of gains.

Investor sentiment improved after both the United States and Iran signalled progress on a memorandum of understanding that could potentially halt the conflict between the two nations and reopen shipping routes through the Strait of Hormuz.

However, uncertainty around the timeline for a final agreement remained. US Secretary of State Marco Rubio said negotiating a deal with Iran could “take a few days” following the latest US strikes in southern Iran.

Banking and mining stocks support the FTSE 100

Financial and mining stocks were among the strongest contributors to gains on the FTSE 100 index.

Major lenders, including HSBC, Barclays, and Lloyds, were among the top boosts to the benchmark index during the session.

Mining companies also moved higher as metals prices strengthened.

Shares of Rio Tinto and Glencore rose around 1% each.

In contrast, oil majors weakened as crude prices declined amid hopes of easing geopolitical tensions.

Shares of BP fell 1%, while Shell slipped 0.5%.

Inflation concerns remain in focus

The latest market gains came after the FTSE 100 ended a four-week losing streak on Friday, supported by softer economic data that reduced expectations of a potential Bank of England rate hike.

However, inflation concerns continued to remain in focus for investors.

A recent report showed that British shop price inflation accelerated in May, driven by disruption and higher energy costs linked to the ongoing conflict.

The data added to concerns that geopolitical tensions could continue to pressure consumer prices despite recent optimism around easing conflict risks.

Kingfisher rises while Melrose Industries declines

Among individual stocks, shares of Kingfisher gained nearly 4% after the home improvement retailer maintained its full-year profit outlook despite reporting a decline in first-quarter underlying sales.

The company’s reassurance on earnings appeared to support investor confidence despite weaker quarterly demand trends.

Meanwhile, Melrose Industries fell 4% after an overheating chemical tank at its GKN Garden Grove facility in California triggered an emergency response and evacuation orders over the weekend.

The incident weighed on investor sentiment surrounding the aerospace engineering group during Tuesday’s trading session.