London midday: Stocks off lows as defence sector rallies

(Sharecast News) - London stocks were a touch weaker but well off earlier lows by midday on Thursday, helped along by a strong showing from the defence sector, as rising oil prices fuelled inflation concerns amid escalating tensions in the Middle East.

The FTSE 100 was down 0.1% at 10,341.73. Brent crude was up 5.8% at $97.33 a barrel, having topped $100 earlier, while West Texas Intermediate was 5.2% higher at $91.80.

Oil prices ticked up despite countries around the world pledging to release crude reserves, as hostilities intensified in the Middle East. The International Energy Agency said on Wednesday that its 32 members had agreed to release an unprecedented 400m barrels of oil, to help curb the economic fallout from the war.

Prices initially softened in response, but overnight they once again raced higher, after three more vessels were hit in the Gulf, two in Iraqi waters and another near Dubai. A fuel facility in Bahrain and an Italian military base in Iraq were also hit.

Around a fifth of the world's oil supply is transported through the narrow Strait of Hormuz between Iran and Saudi Arabia. It is now deemed too dangerous to use, and shipping traffic has ground to a near-halt. Iran has pledged to target any vessel linked to the US, Israel or their allies.

Oil and gas facilities in the region are also coming under attack, and a number of suppliers are shuttering operations.

Russ Mould, investment director at AJ Bell, said: "Once again the FTSE 100 was protected from the worst of the falls on Thursday as its higher exposure to the energy sector helped support the UK stock index.

"Nonetheless, UK stocks were still in the red as investors reacted to ongoing disruption to energy markets from the Middle East conflict. Oil prices surged through the $100 per barrel mark for the second time this week.

"Defence and defensive stocks were in demand as investors looked for places to hunker down and ride out the current turbulence.

"Psychologically, oil being above $100 is a red alarm bell for the market in the way a price of $99.99, while a negligible difference on paper, wouldn't be.

"Iran has warned of $200 oil as it continues to target key infrastructure and the shipping routes through the Strait of Hormuz.

"While it is in Iran's interests to engage in this sort of wild speculation, the longer we go without a viable path to de-escalation the bigger the impact this energy shock is likely to have."

In equity markets, banks were under the cosh, with HSBC, Barclays, Standard Chartered and Lloyds among the worst performers on the FTSE 100, with asset manager Schroders also down, along with budget airline easyJet and BA and Iberia owner IAG.

Joshua Mahony, chief market analyst at Scope Markets, said: "The fear of stagflation does remain prevalent right now, with the banks being hit hard on the prospect of dimming economic growth forecasts."

Savills slumped as it agreed to buy US real estate investment bank Eastdil Secured for $1.1bn (�827m) and reported a rise in full-year profit and revenue.

Shawbrook was also sharply lower despite posting a rise in full-year profit and backing its medium-term guidance in its first results since the IPO last year.

Computacenter was in the red even as it reported a jump in full-year profit and revenue and hailed an "outstanding" year for the North American business.

Bodycote slumped after RBC Capital Markets downgraded the stock to 'sector perform' from 'outperform' as it said the valuation was now back in line with history.

Online rail ticket platform Trainline retreated as it said group adjusted core profit growth was set to be within its previously-upgraded guidance range of 10% to 13%, driven by focused marketing spend and cost controls.

Informa lost ground even as it posted a jump in annual revenues and profits, fuelled by strong demand for live events.

Investment manager M&G was lilted changed after it reported flat full-year profits, ahead of expectations, as its net flows turned positive.

Helios Towers fell despite saying its 2025 performance had exceeded market expectations, while On The Beach tumbled as the holiday company temporarily suspended its full-year profit outlook, citing falling demand for Middle East destinations due to the US-Israel war on Iran.

On the upside, Rentokil surged after UBS upgraded the shares to 'buy' from 'neutral' and lifted the price target to 540p from 430p.

Defence firms rallied, with BAE Systems, Babcock, Qinetiq and Chemring all higher.

TP Icap gained as it hailed record full-year results, with adjusted EBIT ahead of expectations, and announced an �80m share buyback.

Safety equipment manufacturer Halma turned higher, after it reiterated full-year guidance despite uncertain market conditions.

Market Movers

FTSE 100 (UKX) 10,341.73 -0.12%

FTSE 250 (MCX) 22,379.72 -0.01%

techMARK (TASX) 5,871.77 0.40%

FTSE 100 - Risers

Rentokil Initial (RTO) 489.70p 4.77%

BAE Systems (BA.) 2,303.00p 3.37%

Airtel Africa (AAF) 347.40p 2.96%

Flutter Entertainment (DI) (FLTR) 8,244.00p 2.41%

Babcock International Group (BAB) 1,417.00p 2.39%

Glencore (GLEN) 533.00p 2.25%

Sainsbury (J) (SBRY) 340.80p 1.91%

Haleon (HLN) 373.20p 1.91%

SSE (SSE) 2,664.00p 1.68%

Rolls-Royce Holdings (RR.) 1,323.00p 1.65%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 1,203.20p -5.45%

easyJet (EZJ) 386.60p -2.77%

Schroders (SDR) 571.00p -2.64%

Persimmon (PSN) 1,235.50p -2.56%

Barclays (BARC) 402.10p -2.06%

Standard Chartered (STAN) 1,628.50p -1.96%

LondonMetric Property (LMP) 194.00p -1.92%

Lloyds Banking Group (LLOY) 96.98p -1.92%

International Consolidated Airlines Group SA (CDI) (IAG) 368.20p -1.58%

M&G (MNG) 296.00p -1.26%

FTSE 250 - Risers

TP Icap Group (TCAP) 265.00p 7.94%

Vistry Group (VTY) 428.20p 7.11%

Hochschild Mining (HOC) 684.00p 5.47%

QinetiQ Group (QQ.) 522.00p 3.77%

Playtech (PTEC) 372.00p 3.33%

Bridgepoint Group (Reg S) (BPT) 233.80p 3.00%

Chemring Group (CHG) 553.00p 2.79%

Bluefield Solar Income Fund Limited (BSIF) 80.70p 2.78%

Harbour Energy (HBR) 277.40p 2.74%

Vesuvius (VSVS) 446.60p 2.24%

FTSE 250 - Fallers

Savills (SVS) 927.00p -7.49%

Shawbrook Group (SHAW) 385.25p -6.45%

Dunelm Group (DNLM) 862.50p -6.20%

Helios Towers (HTWS) 173.80p -5.72%

Safestore Holdings (SAFE) 689.50p -5.10%

Computacenter (CCC) 3,014.00p -4.93%

Blackrock Throgmorton Trust (THRG) 564.00p -3.75%

Volution Group (FAN) 600.00p -3.53%

Aston Martin Lagonda Global Holdings (AML) 41.70p -3.48%

Raspberry PI Holdings (RPI) 301.00p -3.44%