FTSE indexes edge lower despite energy sector gains from rising oil prices

The UK's main stock indexes traded lower on Tuesday as escalating tensions between the United States and Iran dampened investor sentiment.

Losses in financial and travel stocks outweighed gains in the energy sector, where oil major BP advanced after indicating that higher oil prices and stronger trading performance would support its second-quarter earnings.

By 1024 GMT, the blue-chip FTSE 100 index fell 0.3% to 10,461.14 points, while the mid-cap FTSE 250 index declined 0.7%.

US-Iran tensions push oil prices higher

Market sentiment remained cautious after the United States carried out strikes against Iran for a third consecutive night.

At the same time, US President Donald Trump announced a blockade of Iranian shipping and imposed a 20% fee on cargo transiting the Strait of Hormuz.

The developments lifted crude oil prices, with Brent crude rising 3% to around $85 a barrel.

The increase in oil prices supported energy stocks but added to broader concerns over geopolitical risks and their potential impact on global markets.

Travel and financial stocks lead declines

Travel and leisure stocks were the weakest-performing sector during the session, falling 2.4%.

InterContinental Hotels Group declined 3.7%, making it the biggest loser on the FTSE 100 index as investors moved away from travel-related shares amid rising geopolitical uncertainty.

Banks also weighed on the benchmark index.

Investors remained cautious ahead of earnings reports from major US banks scheduled for later in the day, limiting demand for financial stocks.

Energy shares outperform in a stronger oil market

Energy companies provided the strongest support to the market as higher crude prices lifted the sector.

The energy index gained 1.8%, led by BP, which rose 2.3%.

The company said stronger oil trading activity and improved refining margins would support its second-quarter earnings performance.

The positive update helped offset some of the broader weakness across the UK market, although it was not enough to lift the benchmark indexes into positive territory.

Mining stocks also advance

Industrial metals miners also recorded gains during the session.

Atalaya Mining Copper, Glencore, and Rio Tinto rose between 1.6% and 3.5%, making the mining sector one of the stronger performers alongside energy stocks.

The gains in miners added some support to the broader market even as investors continued to monitor geopolitical developments and their impact on commodity prices.

Investors await key US economic signals

Market participants also turned their attention to upcoming US economic data.

Investors awaited the latest US inflation report, along with commentary from Federal Reserve Chair Kevin Warsh.

The updates were expected to provide additional insights into the health of the world's largest economy and could influence expectations for financial markets.

Ashmore and Debenhams Group move on to company updates

Among individual stocks, Ashmore fell 1.8% despite reporting quarterly net inflows that exceeded expectations.

The British asset manager said investors continued allocating capital to higher-yielding emerging market assets despite ongoing geopolitical uncertainty.

However, the stronger-than-expected inflows did not prevent the stock from trading lower.

Meanwhile, Debenhams Group gained 3.1% after the online retailer said positive trading momentum continued through June and July.

The company attributed the improvement to stronger sales margins and lower customer returns, adding that its turnaround strategy continued to gain traction.

The update made Debenhams one of the stronger performers during the session, providing a positive contrast to the broader weakness seen across the UK equity market.