(Sharecast News) - London stocks fell on Tuesday, with bond yields up as rising oil prices stoked fears about inflation following fresh strikes between the US and Iran.
The FTSE 100 closed down 0.3% at 10,789.28, while Brent crude was up 2.4% at $92.68 a barrel and West Texas Intermediate was 3.1% higher at $88.43 after the US and Iran exchanged fresh strikes for the first time since July over the weekend.
Russ Mould, investment director at AJ Bell, said: "A post-UK Bank Holiday hangover looked inevitable for the FTSE 100 given the losses chalked up across Europe, Asia and the US since the end of last week.
"Government bond yields have renewed their surge as oil prices move back above $90 per barrel, bringing concerns about inflationary pressures back to the fore.
"In a familiar pattern, the hints at diplomatic progress in the Middle East last week have amounted to little as hostilities between the US and Iran instead ramp up once more.
"UK shop price inflation hitting a two-year high shows how these geopolitical ructions are feeding into a higher cost of living for UK households. Retailers, travel operators and companies with links to the global aviation sector were among those to fall in London, where the main gainers were in the energy sector."
A survey out earlier showed that growth in the UK manufacturing sector eased to a five-month low in August as growth rates in both output and new orders lost momentum.
The S&P Global manufacturing purchasing managers' index declined to 51.7 from 51.9 in July but was above the flash estimate of 51.5. The index has now registered above the 50.0 mark that separates contraction from expansion for 10 months in a row.
The survey also showed that employment rose for the fifth consecutive month and at the quickest pace for two years, while business optimism rose to a six-month high.
Separately, data from the Bank of England showed that net mortgage approvals for house purchases declined to 56,100 - the lowest level since January 2024 - from 58,200 in June. Net borrowing of mortgage debt fell to £4.3bn in July from £7.7bn the month before.
The 'effective' interest rate - the actual interest paid - on newly drawn mortgages eased to 4.45% in July from 4.35% in June. Meanwhile, the rate on the outstanding stock of mortgages was 3.97%, up from 3.96% in June.
The report also showed that net borrowing of consumer credit by individuals rose to £2bn in July from £1.9bn the month before. Within that, net borrowing through credit cards was £0.9bn, down from £1.0bn. Net borrowing through other forms of consumer credit - such as car dealership finance and personal loans - rose to £1.1bn in July from £0.9bn a month earlier.
Data from Nationwide showed house prices returned to growth in August but remained subdued.
In equity markets, Reckitt Benckiser surged after an Illinois court ruled in favour of its Mead Johnson unit in a trial alleging that its baby formula was linked to deadly bowel disease in premature babies. The stock also benefited from an upgrade to 'overweight' from neutral' by JPMorgan.
Energy giants BP and Shell gushed higher in tandem with oil prices.
Bodycote jumped as it agreed to be taken over by US private equity firm Veritas Capital in a £1.65bn deal. Under the terms of the acquisition, Veritas - through its special purpose vehicle Vulcan Alpha Bidco - will pay 940p per share for Bodycote. This comprises 932.8p in cash and the FY26 interim dividend of 7.2p per share.
On the downside, precious metals miner Fresnillo tumbled as gold prices fell, while Bunzl reversed earlier gains to end down even as it lifted its full-year margin, reported a rise in first-half profit and revenue, and announced a new £500m share buyback.
Oxford Biomedica slid after Novartis paused trials of an experimental cell therapy for autoimmune diseases following the death of three patients. Bristol Myers Squibb also said it had paused similar trials out of "an abundance of caution".
Broker Panmure Liberum pointed out that Novartis and Bristol-Myers Squibb are customers of Oxford Biomedica and said the suspension of clinical trials could have near-term ramifications for the company.
Oxford Nanopore Technologies was also sharply lower.
Market Movers
FTSE 100 (UKX) 10,789.28 -0.32%
FTSE 250 (MCX) 24,521.29 -1.67%
techMARK (TASX) 6,109.68 -1.14%
FTSE 100 - Risers
BP (BP.) 541.30p 5.21%
Reckitt Benckiser Group (RKT) 5,360.00p 4.48%
Rentokil Initial (RTO) 356.90p 3.24%
Airtel Africa (AAF) 342.20p 3.13%
Tesco (TSCO) 471.50p 3.11%
Shell (SHEL) 3,432.50p 2.63%
Hiscox Limited (DI) (HSX) 1,868.00p 1.41%
British American Tobacco (BATS) 4,174.00p 1.09%
Convatec Group (CTEC) 229.80p 1.06%
Imperial Brands (IMB) 2,551.00p 1.03%
FTSE 100 - Fallers
Weir (WEIR) 2,706.00p -4.92%
Fresnillo (FRES) 3,016.00p -4.86%
Rolls-Royce Holdings (RR.) 1,459.20p -4.64%
InterContinental Hotels Group (IHG) 155.90p -4.39%
Antofagasta (ANTO) 3,828.00p -4.30%
Autotrader Group (AUTO) 505.60p -4.24%
Melrose Industries (MRO) 494.80p -3.96%
International Consolidated Airlines Group SA (CDI) (IAG) 422.40p -3.61%
ICG (ICG) 1,947.00p -3.33%
JD Sports Fashion (JD.) 83.98p -3.14%
FTSE 250 - Risers
Energean (ENOG) 777.00p 6.00%
Bodycote (BOY) 955.00p 4.60%
Applied Nutrition (APN) 329.00p 3.95%
Drax Group (DRX) 800.00p 3.23%
Diversified Energy Company (DI) (DEC) 1,112.00p 2.77%
Ithaca Energy (ITH) 279.60p 1.53%
Lancashire Holdings Limited (LRE) 625.00p 1.46%
Harbour Energy (HBR) 254.60p 1.43%
Gamma Communications (GAMA) 1,156.00p 1.40%
Paragon Banking Group (PAG) 807.50p 1.13%
FTSE 250 - Fallers
Oxford Biomedica (OXB) 447.00p -13.71%
Oxford Nanopore Technologies (ONT) 160.00p -9.14%
Globaldata (DATA) 77.20p -8.10%
Ceres Power Holdings (CWR) 362.60p -7.69%
Hochschild Mining (HOC) 626.50p -6.07%
Trustpilot Group (TRST) 274.80p -5.95%
Pan African Resources (PAF) 128.30p -5.87%
Endeavour Mining (EDV) 4,484.00p -5.44%
Dr. Martens (DOCS) 73.60p -5.15%
Renishaw (RSW) 4,860.00p -4.80%
34.98 (0.32%)
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