UK stocks gain as Middle East peace hopes lift sentiment

The UK’s main stock indices edged higher on Thursday, supported by gains in materials and financial stocks, as optimism grew over a potential easing of tensions in the Middle East.

Investor sentiment improved after US President Donald Trump said that talks between Washington and Tehran would take place on Thursday.

The benchmark FTSE 100 rose 0.19% to 10,579.32 points by 10:30 GMT.

The mid-cap FTSE 250 index also advanced, gaining 0.59% during the session.

Miners track metal prices higher

Industrial metal miners led sectoral gains, rising 0.8% as base metal prices strengthened.

Among major stocks, Rio Tinto climbed 1.6%, while Anglo American added 1.3%, reflecting improved demand outlook and commodity price support.

The gains in mining stocks helped underpin the broader FTSE 100 index, which has significant exposure to commodity-linked firms.

Economic data and BoE stance in focus

Fresh economic data showed that Britain’s economy expanded at its fastest pace in a year in February, providing an additional boost to market sentiment.

The cautious tone from the Bank of England signalled a measured approach to monetary policy, which investors interpreted as supportive for equities.

Financials rise

Heavyweight financial stocks also contributed to the gains, with the sector edging up 0.1%.

Investment firm 3i Group rose 1.4%, adding to the positive momentum.

However, not all financial names advanced.

Asset manager Ashmore Group fell 3.3%, weighed down by net outflows linked to geopolitical tensions stemming from the US-Israeli conflict involving Iran.

Construction stocks surge on outlook upgrade

Construction stocks outperformed the broader market after Morgan Sindall jumped 8% following an upgrade to its profit outlook.

The strong update lifted the construction and materials subindex by 2.2%, making it one of the top-performing sectors of the session.

Mixed signals from consumer and travel sectors

In the consumer space, Tesco said its profit outlook remained uncertain due to ongoing tensions in the Middle East.

Despite the cautious tone, its shares rose 1.13%.

Healthcare stocks, however, offered some support to the broader index.

The sector posted gains, with AstraZeneca rising 1%, helping to offset wider market weakness.

The personal goods sector emerged as the worst performer in percentage terms.

This was largely due to a 1.3% decline in Burberry, after disappointing updates from peers Kering and Hermès weighed on investor sentiment.

On the other hand, airline EasyJet fell 3.6% after warning of a larger first-half loss, citing the impact of the conflict, as mentioned in a Reuters report.

Overall, UK equities remained sensitive to developments in the Middle East, with investor sentiment closely tied to any signs of diplomatic progress.

The prospect of talks between the United States and Iran provided some relief to markets, even as companies across sectors flagged ongoing uncertainty linked to the conflict.