London close: Stocks rise, but gains nearly erased in afternoon trade

(Sharecast News) - Strong gains from mining, banking and defence stocks propped up UK markets on Tuesday, though gains were modest amid ongoing uncertainty regarding peace talks between the US and Iran.

The FTSE 100 was up just 0.12% at 10,497.12 by the close of play, with the index coming off earlier highs which sent it over 1% higher to 10,613.18 - a level it has not closed above since mid-April.

Investors were reacting to a barrage of global economic data during the session, along with comments from Donald Trump, who claimed that peace talks between the US and Iran would resume in Doha on Tuesday.

"This sounds like progress, given the tit-for-tat hostilities which took place over the weekend. But no doubt investors will be wary of reading too much into post-talk comments, given the fractious nature of the US/Iran relationship," said Trade Nation analyst David Morrison.

In economic data, factory activity in China grew more than expected in June, according to government data. The official manufacturing PMI rose to 50.3 from 50.0 in May, coming in a touch ahead of market expectations for a reading of 50.1, while the non-manufacturing PMI ticked up to 50.2 in June from 50.1 in May, beating the 49.9 estimate.

In Europe, inflation figures from economic powerhouses Germany and France pointed to a surprise slowdown in inflation in June, as energy price growth eased more than expected. Also in Germany, government figures showed a drop in unemployment and an unexpected rise in retail sales in June.

Meanwhile in the UK, data from the Office for National Statistics showed the UK economy grew 0.6% in the three months to March, in line with expectations and following revised growth of 0.1% in the final quarter of 2025. Growth was driven by an increase in all three sectors, the ONS said, with the largest contribution from the services sector, which grew 0.8%.

Defence, mining and banking stocks rise

Defence stocks gained as the British government said it was ramping up investment in drones and strengthen the country's nuclear deterrent as part of a �15bn hike in defence spending. Babcock, Melrose, Rolls-Royce and BAE Systems were all rising strongly the FTSE 100, along with FTSE 250 peer Chemring.

"An extra �15bn funding on UK defence projects fired up shares in defence contractors, giving a leg-up to a sector that had lost momentum following a storming run in recent years," AJ Bell's Coatsworth said.

Mining stocks were performing well as industrial metal prices rose on the back of better-than-expected economic data from China, with heavyweights Antofagasta, Anglo American and Glencore all putting in decent gains.

On the downside, Ladbrokes owner Entain slumped following reports that all-night slot machine shops and casinos could face a �460m tax rise if Andy Burnham acts on his concerns about the gambling industry as prime minister.

Housebuilders were mostly also in the red following reports that seven of the biggest UK housebuilders are facing a �4.5bn lawsuit over claims they overcharged buyers. The claim is being brought by Mark McLaren, the proposed class representative of the Home Owners Collective Action, against Bellway, Redrow, Berkeley Group, Persimmon, Taylor Wimpey and Vistry as well as privately-owned Bloor Homes and Countryside Partnerships.

Market Movers

FTSE 100 (UKX) 10,497.12 0.12%

FTSE 250 (MCX) 23,013.45 -0.01%

techMARK (TASX) 5,869.78 -0.13%

FTSE 100 - Risers

Babcock International Group (BAB) 951.80p 3.34%

Scottish Mortgage Inv Trust (SMT) 1,470.50p 3.27%

Melrose Industries (MRO) 474.90p 2.79%

St James's Place (STJ) 1,211.50p 2.76%

Lloyds Banking Group (LLOY) 111.10p 2.11%

Rolls-Royce Holdings (RR.) 1,444.60p 2.08%

Halma (HLMA) 3,934.00p 2.07%

Weir Group (WEIR) 2,404.00p 2.04%

BAE Systems (BA.) 1,844.00p 1.99%

Lion Finance Group (BGEO) 11,330.00p 1.98%

FTSE 100 - Fallers

Entain (ENT) 559.00p -5.48%

Smith & Nephew (SN.) 1,090.50p -4.63%

Vodafone Group (VOD) 99.60p -3.72%

BT Group (BT.A) 190.10p -3.11%

Persimmon (PSN) 1,050.00p -2.96%

Diageo (DGE) 1,522.50p -2.81%

Flutter Entertainment (DI) (FLTR) 7,584.00p -2.77%

Burberry Group (BRBY) 1,062.00p -2.43%

Airtel Africa (AAF) 327.60p -2.33%

Metlen Energy & Metals (MTLN) 41.22p -2.32%

FTSE 250 - Risers

Ceres Power Holdings (CWR) 509.50p 7.44%

Raspberry PI Holdings (RPI) 823.00p 6.88%

Chemring Group (CHG) 512.00p 5.65%

AJ Bell (AJB) 611.50p 4.62%

XP Power Ltd. (DI) (XPP) 1,942.00p 4.41%

Polar Capital Technology Trust (PCT) 713.00p 4.01%

Edinburgh Worldwide Inv Trust (EWI) 290.50p 3.75%

Allianz Technology Trust (ATT) 752.00p 3.58%

Pacific Horizon Inv Trust (PHI) 1,170.00p 3.54%

Diversified Energy Company (DI) (DEC) 1,034.00p 3.50%

FTSE 250 - Fallers

Rank Group (RNK) 94.90p -8.04%

WPP (WPP) 235.80p -4.03%

easyJet (EZJ) 558.40p -3.99%

Hays (HAS) 31.18p -3.77%

Harworth Group (HWG) 120.00p -3.54%

Close Brothers Group (CBG) 405.20p -3.41%

Globaldata (DATA) 74.70p -3.36%

Cranswick (CWK) 5,500.00p -3.34%

Trainline (TRN) 204.00p -3.13%

Pan African Resources (PAF) 95.50p -2.95%