London open: FTSE falls as oil prices rise amid mixed messages on Middle East

(Sharecast News) - London stocks fell in early trade on Thursday as oil prices ticked up amid conflicting messages about the status of the war in the Middle East.

At 0825 GMT, the FTSE 100 was down 0.7% at 10,036.90. Brent was up 2.5% at $104.80 a barrel and West Texas Intermediate was 2.8% higher at $92.83.

The US has said it was "very close" to meeting its objectives in the war with Iran and that talks about a peace plan have taken place. However. Iranian Foreign Minister Abbas Araghchi reportedly told state media on Wednesday that Iran has no intention of negotiating with the US.

Iran state media also reported that the country would reject a US ceasefire offer and would instead counter it with its own five-point list that would give Iran control of the vital Strait of Hormuz and war compensation.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "After two days of gains, the FTSE 100 has given back a little this morning as investors seek out concrete signs of progress towards a peace deal between Washington and Iran and the resumption of oil and gas transit through the Strait of Hormuz.

"So far, the main communication channels appear to be traditional and social media, as well as third-party states. It may take a formal agreement or at least a move to the negotiating table to steady markets further. While the bears may have the edge this morning, there could be bulls waiting in the wings if moves towards a resolution gather pace."

On home shores, the British Retail Consortium's latest consumer confidence indicator dropped to its lowest level in at least two years in March as escalating conflict in the Middle East hammered sentiment about the macroeconomic outlook.

Some 64% of consumers said they expected the state of the UK economy to get worse over the next three months, while just 11% predicted an improvement, the BRC said.

That resulted in a net balance - those expecting an increase minus those expecting a decrease - of -53%, down from -30% in February and the lowest level since the BRC started collecting sentiment data in March 2024.

Helen Dickinson, chief executive of the BRC, said that the prospect of higher inflation as a result of the war has hammered confidence.

"As stock markets tumbled, confidence in both the economy and personal finances dropped to their lowest levels on record. The drop in confidence was most pronounced among the Boomer generation, who are most reliant on investment and pension funds. Meanwhile, spending expectations rose as shoppers expected to see rising energy costs reflected across the economy," Dickinson said.

"Just as the economy was beginning to turn a corner on inflation, the rise in global energy prices is particularly unwelcome for businesses and families. It is now vitally important that Government policy does not exacerbate the situation, and bringing down the cost of living must be a top priority."

Elsewhere, a survey from the Confederation of British showed that private sector activity is once again expected to fall in the three months to June, with businesses also increasingly concerned about conflict in the Middle East.

According to the CBI's latest growth indicator, private sector activity fell in the three months to March, with a balance of -35, largely unchanged on December's -34.

In equity markets, high street stalwart Next shot higher as it posted above-forecast earnings following an "exceptional" year and lifted its profit outlook.

The retailer saw total group sales jump 10.8% in the 52 weeks to January end, to �7bn, while pre-tax profits were 14.5% stronger at �1.16bn, ahead of analyst expectations for �1.15bn.

Looking to the current year, Next maintained its guidance for full-price sales growth of 4.5% but nudged its profit outlook upwards. It now expects annual pre-tax profits of �1.21m, around �8m more than guidance provided in January.

Oil giants Shell and BP gushed higher amid firmer oil prices.

On the downside, Aviva, Segro, St James's Place, Prudential and Mony Group all lost ground as they traded without entitlement to the dividend.

Currys tumbled after it announced that chief executive officer Alex Baldock is stepping down after eight years in the job to take a new external position.

Beauty and nutrition retailer THG surged after saying it swung to a profit in 2025 as disposals and a strong second half helped drive a turnaround across the group.

Ceres Power also rallied after results, along with Pollen Street.