(Sharecast News) - London stocks were set to rise at the open on Wednesday as oil prices fell amid signs the US is trying to de-escalate the conflict with Iran, and as investors digested the latest UK inflation reading.
The FTSE 100 was called to open around 60 points higher. At 0730 GMT, Brent crude was down 4% at $100.28 a barrel and West Texas Intermediate was 3.4% lower at $89.24.
Speaking at the Oval Office on Tuesday, US President Donald Trump said the US and Iran were "in negotiations right now".
"They're talking to us, and they're talking sense," Trump said.
Also on Tuesday, it was reported that the US had sent a 15-point plan to Iran as it looks to resolve the conflict in the Middle East.
According to The New York Times, citing two officials briefed on the diplomacy, the plan was delivered via Pakistan.
The sources said it was unclear how widely the plan had been shared among Iranian officials and whether Iran was likely to accept it as a basis for negotiations. Nor was it clear whether Israel was on board with the proposal.
But the delivery of the plan showed that the administration was ramping up efforts to conclude a war, now in its fourth week, that has drawn in several other countries.
The New York Times did not see a copy of the plan, but the officials shared some of its broad outlines, saying that it addresses Iran's ballistic missile and nuclear programs. The plan also discusses maritime routes, one of the officials said.
Israel's Channel 12 was the first to report the plan, saying that a one-month ceasefire would be announced according to a mechanism being worked on by US Middle East envoys Steve Witkoff and Jared Kushner.
According to N12, the 15-point plan includes the dismantling of Iran's existing nuclear capabilities, a commitment from Iran to never pursue nuclear weapons and no uranium enrichment on Iranian soil.
It also includes the transfer of all enriched material under an agreed schedule, the decommissioning of nuclear facilities at Natanz, Isfahan and Fordow, and full access for international atomic inspectors to all information.
Under the plan, Iran would end its proxy strategy in the region, stop funding and arming proxy groups, and keep the Strait of Hormuz open as a free maritime zone. The plan also includes restricting missile use to self-defence purposes.
In return, all sanctions on Iran would be lifted. Iran would also receive support for a civilian nuclear program in Bushehr.
On home shores, figures from the Office for National Statistics showed that inflation was unchanged in February, in line with forecasts.
The consumer prices index in the 12 months to February showed no change on January, at 3%.
The largest upward driver was the price of clothing. But that was offset by falls in the cost of petrol ahead of war starting in the Middle East. There was little change in food prices.
Core CPI, which strips out the more volatile effects of energy, food, alcohol and tobacco prices, edged up to 3.2% from 3.1%
Adam Deasy, economist at PwC UK, said: "A few weeks ago, this would have represented a steady reading, and another step along the path back to target. Now, we are facing an energy-shock-shaped bump in the road.
"The inflation impact of the conflict in the Middle East remains highly uncertain. Much will depend not just on its scale and duration, but on how much businesses can pass higher costs on to consumers. With demand soft and the labour market weakening, that may prove difficult. Any government support measures will also shape the outcome. The direction of travel is clear; the scale is not.
"The outlook for policy rates is equally uncertain. Markets are pricing in hikes, while economists generally expect rates to stay on hold, or even fall later in the year. The Bank of England is in a tricky spot, having to make judgements not only on the outlook for global geopolitics, but also on the extent to which higher energy prices will trigger a broader resurgence in inflation pressures. For now, like the rest of us, they are waiting for clearer signals."
In corporate news, RS Group said it expected a 0.6% fall in like-for-like annual revenue due to "difficult markets", although annual adjusted pre-tax profit would come in marginally ahead of expectations of 241m.
Water supply firm United Utilities said full-year underlying earnings per share were expected to be in line with previous guidance of roughly 100p.
However, United Utilities also said it was implementing a change in the estimation technique used to measure inflationlinked debt as part of an effort to reduce volatility in its income statement. The FTSE 100-listed firm expects the accounting change to lead to a reduction in underlying net finance expenses of approximately 35m and an increase in underlying EPS of around 5p.
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