London close: FTSE surges, oil prices fall amid hopes of end to Iran war

(Sharecast News) - London stocks rose to a two-week high on Wednesday and oil prices retreated amid hopes the Iran war could be nearing an end.

The FTSE 100 closed up 1.9% at 10,364.79. Brent crude was down 1.9% at $101.95 a barrel and West Texas Intermediate was 1.2% lower at $100.17.

Sentiment was lifted after US president Donald Trump said the war with Iran could end in two to three weeks.

Speaking to reporters at the White House on Tuesday, Trump said that "Iran doesn't have to make a deal" to end the conflict, and that the US will be "leaving very soon".

"Now we're finishing the job. I think in two weeks or maybe a few days longer, we'll do the job. We want to knock out everything they've got," he said. "When we feel that they are, for a long period of time, put into the Stone Ages and they won't be able to come up with a nuclear weapon, then we'll leave."

Trump is due to deliver an "important update on Iran" in a Wednesday night prime time address at the White House.

Meanwhile, Iran's Revolutionary Guards said they would target 18 US companies in the Middle East in retaliation for attacks on Iran, as of 1 April, according to state media.

The list includes Microsoft, Google, Apple and Boeing, and the IRCG said: "These companies should expect the destruction of their respective units in exchange for each terror act in Iran, starting from 8 PM Tehran time on Wednesday, April 1st."

Danni Hewson, head of financial analysis at AJ Bell, said: "Markets remained in a resolutely positive mood on Wednesday as they continue to take heart from hints at an end to the conflict in the Middle East.

"President Trump indicated that Iran's president has asked for a ceasefire, with the US response set to depend on a reopening of the Strait of Hormuz. In a familiar pattern, Iran has again denied making any such request.

"Suggestions that market moves in recent days reflected a snapback in negative positions taken by hedge funds rather than purely a reaction to the latest developments in the Middle East add to a sense that the rebound for stocks remains fragile.

"The next key test for sentiment is likely to come in the early hours of Thursday (UK time) as Trump is set to deliver an address from the White House. There have been indications the US might pull out of the Nato alliance, which could be another destabilising factor if it plays out.

"Oil prices are lower than levels seen at the start of the week but are teetering around the $100 per barrel mark, as it is still uncertain how long disruption to regional infrastructure and shipping routes will last. The energy shock has been prolonged enough for some level of inflationary impact to be a certainty. It's now the size of the impact which is in question.

"The ingredient holding the FTSE 100 back was the same one that helped the index outperform some of its global counterparts in recent weeks, namely the heavy weighting of BP and Shell. Traditional defensives including tobacco stocks are among the other names running out of puff. Banks, aviation-related stocks, miners and stocks with links to the US were among those enjoying gains."

On home shores, a survey showed that factory inflation rose in March at the steepest pace since 1992.

In equity markets, defence company Babcock surged after saying it had signed a six-month bridging agreement with the government to maintain continuity of Britain's naval base and nuclear submarine fleet support services under the future maritime support programme (FMSP) contract.

A new long-term agreement is in the latter stages of negotiation with the Ministry of Defence after a five-year FMSP contract ended on 31 March. Babcock said the government had signed a letter of intent alongside the bridging deal.

Babcock was also boosted by an upgrade to 'buy' from 'neutral' at Citi, while engine maker Rolls-Royce shot higher after an initiation at 'overweight' by Wells Fargo.

Banks were on the rise, with Lloyds, NatWest and HSBC sharply higher.

BA and Iberia owner IAG and Wizz Air both flew higher, along with easyJet and cruise operator Carnival.

Berkeley Group slumped after saying it plans to stop buying new land as it looks "to maximise long term shareholder value by prioritising value creation" from its existing land holdings.

The company said it does not believe it can make its required rate of return on investment in new land acquisitions due to the continuous increase in the tax and regulatory burden on residential development.

Berkeley was also in focus after an upgrade to 'sector perform' from 'underperform' at RBC Capital Markets. Barratt Redrow was upgraded to 'outperform' from 'sector perform'.

BP and Shell lost ground as oil prices retreated, along with Diversified Energy, Ithaca Energy and Harbour Energy.

Rightmove shares tumbled following reports a �1.5bn legal claim has been filed against the company with the Competition Appeal Tribunal.

Rightmove did not disclose details of the legal action, but according to reports, estate agents have accused the property portal of charging "unsustainable" fees, with some saying their charges have more than doubled in recent years.

The class action was launched by accountant Jeremy Newman on behalf of potentially hundreds of estate agents.

Market Movers

FTSE 100 (UKX) 10,364.79 1.85%

FTSE 250 (MCX) 21,688.19 2.28%

techMARK (TASX) 5,740.10 2.10%

FTSE 100 - Risers

Compass Group 11 (CPG) 29.55p 41.73%

Babcock International Group (BAB) 1,268.00p 9.50%

Rolls-Royce Holdings (RR.) 1,207.00p 6.63%

3i Group (III) 2,584.00p 5.99%

Fresnillo (FRES) 3,496.00p 5.81%

Lloyds Banking Group (LLOY) 97.70p 5.80%

International Consolidated Airlines Group SA (CDI) (IAG) 369.80p 5.72%

Scottish Mortgage Inv Trust (SMT) 1,258.50p 5.67%

NATWEST GROUP (NWG) 583.20p 5.42%

HSBC Holdings (HSBA) 1,286.60p 5.32%

FTSE 100 - Fallers

Berkeley Group Holdings (The) (BKG) 3,104.00p -9.66%

BP (BP.) 576.00p -5.00%

Shell (SHEL) 3,443.50p -3.89%

Rightmove (RMV) 422.90p -1.40%

British American Tobacco (BATS) 4,313.00p -1.33%

Haleon (HLN) 371.50p -0.62%

Games Workshop Group (GAW) 17,600.00p -0.56%

Glencore (GLEN) 562.50p -0.53%

Imperial Brands (IMB) 3,041.00p -0.52%

London Stock Exchange Group (LSEG) 8,822.00p -0.47%

FTSE 250 - Risers

Raspberry PI Holdings (RPI) 488.20p 13.59%

Pan African Resources (PAF) 153.60p 10.19%

Playtech (PTEC) 363.50p 8.83%

Wetherspoon (J.D.) (JDW) 602.00p 7.89%

Chemring Group (CHG) 546.00p 7.48%

Trustpilot Group (TRST) 207.00p 7.25%

Hochschild Mining (HOC) 638.50p 6.95%

BlackRock World Mining Trust (BRWM) 937.00p 6.36%

Wizz Air Holdings (WIZZ) 902.50p 6.24%

Oxford Nanopore Technologies (ONT) 117.50p 6.05%

FTSE 250 - Fallers

Diversified Energy Company (DI) (DEC) 1,252.00p -11.21%

Ithaca Energy (ITH) 245.00p -5.04%

Harbour Energy (HBR) 287.80p -4.00%

Energean (ENOG) 829.50p -3.99%

Barr (A.G.) (BAG) 627.00p -3.83%

Tate & Lyle (TATE) 353.20p -2.43%

Pagegroup (PAGE) 136.30p -1.23%

Trainline (TRN) 224.60p -1.06%

GCP Infrastructure Investments Ltd (GCP) 71.90p -0.96%

Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 303.50p -0.82%