(Sharecast News) - London stocks fell in early trade on Friday amid escalating tensions in the Middle East, after Israel hit Iran's nuclear sites.
At 0820 BST, the FTSE 100 was down 0.6% at 8,832.75, but outperforming its European peers thanks to a strong showing from heavily-weighted oil majors.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: "Tensions in the Middle East are running sky high as Israel launched a wave of airstrikes against Iran's nuclear development facilities overnight. The pre-emptive action comes just one day after the United Nations nuclear watchdog declared that Tehran is not complying with its obligations and Iranian officials threatened to open a new Uranium enrichment site.
"The US is not thought to be involved in the military action which threatens to scupper Washington's attempts to find a diplomatic solution to the nuclear question, where progress has been slow."
In equity markets, arms maker BAE Systems was the top gainer on the FTSE 100.
Oil giants BP and Shell also gushed higher as events in the Middle East lifted the price of oil.
Kathleen Brooks, research director at XTB, said: "Brent and WTI crude oil are higher by 7% and 6% respectively, after Israel launched airstrikes on Iran. Brent is now trading at $74 per barrel, earlier this week it was $66 per barrel. Iran is now planning to retaliate. Reports suggest that this is the biggest attack Iran has faced since the 1980s. Rumours have swirled all week that an attack was imminent, which is why the Brent crude oil price is higher by 11% in past few days."
Brooks said the sheer scale of the attack and the potential devastating consequences for the region are likely to support the oil price at elevated levels.
"Typically, geopolitical risks do not have a long-term impact on the oil price, however, this is a complex and evolving situation. Iran supplies the world with 5% of the global oil supply, so there is a risk that oil supply could be disrupted. This is why the oil price has surged, although it has pulled back from the 13% rise overnight. This conflict also has a nuclear element since Iran has the pulled out of nuclear talks with the US that were scheduled for Sunday."
The jump in oil prices put pressure on airline stocks, however, with BA and Iberia owner IAG and easyJet both suffering heavy losses.
Travel stocks more generally were in the red, with InterContinental Hotels and cruise operator Carnival also down.
Market Movers
FTSE 100 (UKX) 8,832.75 -0.59%
FTSE 250 (MCX) 21,224.47 -0.76%
techMARK (TASX) 5,120.90 -0.01%
FTSE 100 - Risers
BAE Systems (BA.) 1,955.00p 3.71%
BP (BP.) 390.45p 2.56%
Shell (SHEL) 2,677.50p 2.41%
Fresnillo (FRES) 1,432.00p 1.27%
Centrica (CNA) 166.30p 0.64%
Imperial Brands (IMB) 2,908.00p 0.55%
Coca-Cola Europacific Partners (DI) (CCEP) 6,880.00p 0.44%
SSE (SSE) 1,822.00p 0.30%
Babcock International Group (BAB) 1,035.00p 0.29%
British American Tobacco (BATS) 3,564.00p 0.28%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 311.20p -5.35%
easyJet (EZJ) 533.20p -4.58%
Informa (INF) 760.40p -3.82%
InterContinental Hotels Group (IHG) 8,144.00p -3.00%
CRH (CDI) (CRH) 6,648.00p -2.84%
Ashtead Group (AHT) 4,202.00p -2.37%
Entain (ENT) 730.40p -2.30%
Barclays (BARC) 316.60p -2.27%
Intermediate Capital Group (ICG) 1,928.00p -2.18%
NATWEST GROUP (NWG) 506.20p -2.13%
FTSE 250 - Risers
Harbour Energy (HBR) 206.40p 4.03%
Ithaca Energy (ITH) 161.00p 3.87%
AO World (AO.) 99.50p 3.86%
Rathbones Group (RAT) 1,728.00p 2.49%
Endeavour Mining (EDV) 2,376.00p 1.89%
Mitchells & Butlers (MAB) 285.50p 1.78%
Hochschild Mining (HOC) 251.80p 1.70%
Kainos Group (KNOS) 778.00p 1.50%
QinetiQ Group (QQ.) 512.00p 1.39%
Diversified Energy Company (DEC) 1,045.00p 1.36%
FTSE 250 - Fallers
Carnival (CCL) 1,482.00p -4.76%
Senior (SNR) 163.40p -3.88%
Syncona Limited NPV (SYNC) 85.00p -2.97%
Bytes Technology Group (BYIT) 519.00p -2.54%
Burberry Group (BRBY) 1,098.00p -2.27%
Investec (INVP) 510.00p -2.21%
Edinburgh Worldwide Inv Trust (EWI) 162.40p -2.17%
Mobico Group (MCG) 25.42p -2.16%
Ocado Group (OCDO) 257.90p -2.13%
International Workplace Group (IWG) 198.40p -2.07%
34.29 (0.39%)
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